Correlation Between Dalian Thermal and Harvest Fund

Can any of the company-specific risk be diversified away by investing in both Dalian Thermal and Harvest Fund 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 Dalian Thermal and Harvest Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dalian Thermal Power and Harvest Fund Management, you can compare the effects of market volatilities on Dalian Thermal and Harvest Fund 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 Dalian Thermal with a short position of Harvest Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dalian Thermal and Harvest Fund.

Diversification Opportunities for Dalian Thermal and Harvest Fund

-0.3

Correlation Coefficient

Dalian Thermal  Harvest Fund

Very good diversification

The 3 months correlation between Dalian and Harvest is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Dalian Thermal Power and Harvest Fund Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Fund Management and Dalian Thermal 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 Dalian Thermal Power are associated (or correlated) with Harvest Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Fund Management has no effect on the direction of Dalian Thermal i.e., Dalian Thermal and Harvest Fund go up and down completely randomly.

Pair Corralation between Dalian Thermal and Harvest Fund

Assuming the 90 days trading horizon Dalian Thermal Power is expected to generate 5.99 times more return on investment than Harvest Fund. However, Dalian Thermal is 5.99 times more volatile than Harvest Fund Management. It trades about 0.16 of its potential returns per unit of risk. Harvest Fund Management is currently generating about 0.23 per unit of risk. If you would invest  732.00  in Dalian Thermal Power on September 16, 2024 and sell it today you would earn a total of  78.00  from holding Dalian Thermal Power or generate 10.66% return on investment over 90 days.

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

Dalian Thermal Power  vs.  Harvest Fund Management

Dalian Thermal Power

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Dalian Thermal Power are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dalian Thermal sustained solid returns over the last few months and may actually be approaching a breakup point.

Harvest Fund Management

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Harvest Fund Management are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Harvest Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Dalian Thermal and Harvest Fund

The main advantage of trading using opposite Dalian Thermal and Harvest Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dalian Thermal position performs unexpectedly, Harvest Fund 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 Harvest Fund will offset losses from the drop in Harvest Fund's long position.

The idea behind Dalian Thermal Power and Harvest Fund Management 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.

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.