Correlation Between Dongxing Sec and Winner Information

Can any of the company-specific risk be diversified away by investing in both Dongxing Sec and Winner Information 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 Winner Information 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 Winner Information Technology, you can compare the effects of market volatilities on Dongxing Sec and Winner Information 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 Winner Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongxing Sec and Winner Information.

Diversification Opportunities for Dongxing Sec and Winner Information

0.74

Correlation Coefficient

Dongxing Sec  Winner Information

Poor diversification

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

Pair Corralation between Dongxing Sec and Winner Information

Assuming the 90 days trading horizon Dongxing Sec Co is expected to generate 0.66 times more return on investment than Winner Information. However, Dongxing Sec Co is 1.52 times less risky than Winner Information. It trades about 0.01 of its potential returns per unit of risk. Winner Information Technology is currently generating about 0.01 per unit of risk. If you would invest  1,183  in Dongxing Sec Co on December 26, 2024 and sell it today you would lose (6.00) from holding Dongxing Sec Co or give up 0.51% of portfolio value over 90 days.

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

Dongxing Sec Co  vs.  Winner Information Technology

Dongxing Sec

Risk-Adjusted Performance

Very Weak

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

Winner Information

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Dongxing Sec and Winner Information

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

The idea behind Dongxing Sec Co and Winner Information Technology 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.