Correlation Between Dr Peng and Industrial

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

By analyzing existing cross correlation between Dr Peng Telecom and Industrial and Commercial, you can compare the effects of market volatilities on Dr Peng and Industrial 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 Dr Peng with a short position of Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dr Peng and Industrial.

Diversification Opportunities for Dr Peng and Industrial

-0.74

Correlation Coefficient

Dr Peng  Industrial

Pay attention - limited upside

The 3 months correlation between 600804 and Industrial is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding Dr Peng Telecom and Industrial and Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial and Commercial and Dr Peng 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 Dr Peng Telecom are associated (or correlated) with Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial and Commercial has no effect on the direction of Dr Peng i.e., Dr Peng and Industrial go up and down completely randomly.

Pair Corralation between Dr Peng and Industrial

Assuming the 90 days trading horizon Dr Peng Telecom is expected to under-perform the Industrial. In addition to that, Dr Peng is 2.76 times more volatile than Industrial and Commercial. It trades about -0.1 of its total potential returns per unit of risk. Industrial and Commercial is currently generating about 0.14 per unit of volatility. If you would invest  621.00  in Industrial and Commercial on December 3, 2024 and sell it today you would earn a total of  64.00  from holding Industrial and Commercial or generate 10.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Dr Peng Telecom  vs.  Industrial and Commercial

Dr Peng Telecom

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dr Peng Telecom 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Industrial and Commercial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Industrial may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dr Peng and Industrial

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

The idea behind Dr Peng Telecom and Industrial and Commercial 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.