Correlation Between Chinese Universe and Duzhe Publishing

Can any of the company-specific risk be diversified away by investing in both Chinese Universe and Duzhe Publishing at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Chinese Universe and Duzhe Publishing into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chinese Universe Publishing and Duzhe Publishing Media, you can compare the effects of market volatilities on Chinese Universe and Duzhe Publishing and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Chinese Universe with a short position of Duzhe Publishing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chinese Universe and Duzhe Publishing.

Diversification Opportunities for Chinese Universe and Duzhe Publishing

-0.33

Correlation Coefficient

Chinese Universe  Duzhe Publishing

Very good diversification

The 3 months correlation between Chinese and Duzhe is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Chinese Universe Publishing and Duzhe Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duzhe Publishing Media and Chinese Universe is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Chinese Universe Publishing are associated (or correlated) with Duzhe Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duzhe Publishing Media has no effect on the direction of Chinese Universe i.e., Chinese Universe and Duzhe Publishing go up and down completely randomly.

Pair Corralation between Chinese Universe and Duzhe Publishing

Assuming the 90 days trading horizon Chinese Universe Publishing is expected to under-perform the Duzhe Publishing. But the stock apears to be less risky and, when comparing its historical volatility, Chinese Universe Publishing is 1.46 times less risky than Duzhe Publishing. The stock trades about -0.13 of its potential returns per unit of risk. The Duzhe Publishing Media is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  611.00  in Duzhe Publishing Media on October 8, 2024 and sell it today you would lose (45.00) from holding Duzhe Publishing Media or give up 7.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Chinese Universe Publishing  vs.  Duzhe Publishing Media

Chinese Universe Pub

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chinese Universe Publishing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Duzhe Publishing Media

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Duzhe Publishing Media has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Duzhe Publishing is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Chinese Universe and Duzhe Publishing

The main advantage of trading using opposite Chinese Universe and Duzhe Publishing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chinese Universe position performs unexpectedly, Duzhe Publishing can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Duzhe Publishing will offset losses from the drop in Duzhe Publishing's long position.

The idea behind Chinese Universe Publishing and Duzhe Publishing Media pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.