Correlation Between Dongxing Sec and Hunan Investment

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Can any of the company-specific risk be diversified away by investing in both Dongxing Sec and Hunan Investment 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 Dongxing Sec and Hunan Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongxing Sec Co and Hunan Investment Group, you can compare the effects of market volatilities on Dongxing Sec and Hunan Investment 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 Dongxing Sec with a short position of Hunan Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongxing Sec and Hunan Investment.

Diversification Opportunities for Dongxing Sec and Hunan Investment

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between Dongxing and Hunan is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dongxing Sec Co and Hunan Investment Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Investment and Dongxing Sec 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 Dongxing Sec Co are associated (or correlated) with Hunan Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Investment has no effect on the direction of Dongxing Sec i.e., Dongxing Sec and Hunan Investment go up and down completely randomly.

Pair Corralation between Dongxing Sec and Hunan Investment

Assuming the 90 days trading horizon Dongxing Sec Co is expected to generate 0.9 times more return on investment than Hunan Investment. However, Dongxing Sec Co is 1.11 times less risky than Hunan Investment. It trades about 0.04 of its potential returns per unit of risk. Hunan Investment Group is currently generating about 0.01 per unit of risk. If you would invest  850.00  in Dongxing Sec Co on October 23, 2024 and sell it today you would earn a total of  244.00  from holding Dongxing Sec Co or generate 28.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Dongxing Sec Co  vs.  Hunan Investment Group

 Performance 
       Timeline  
Dongxing Sec 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Dongxing Sec Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dongxing Sec may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Hunan Investment 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Hunan Investment Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hunan Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Dongxing Sec and Hunan Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Dongxing Sec and Hunan Investment

The main advantage of trading using opposite Dongxing Sec and Hunan Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongxing Sec position performs unexpectedly, Hunan Investment 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 Hunan Investment will offset losses from the drop in Hunan Investment's long position.
The idea behind Dongxing Sec Co and Hunan Investment Group 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.

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