Correlation Between Dongxing Sec and Mega Info

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

Diversification Opportunities for Dongxing Sec and Mega Info

0.28

Correlation Coefficient

Dongxing Sec  Mega Info

Modest diversification

The 3 months correlation between Dongxing and Mega is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Dongxing Sec Co and Mega info Media CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mega info Media 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 Mega Info. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mega info Media has no effect on the direction of Dongxing Sec i.e., Dongxing Sec and Mega Info go up and down completely randomly.

Pair Corralation between Dongxing Sec and Mega Info

Assuming the 90 days trading horizon Dongxing Sec is expected to generate 1.73 times less return on investment than Mega Info. But when comparing it to its historical volatility, Dongxing Sec Co is 1.7 times less risky than Mega Info. It trades about 0.04 of its potential returns per unit of risk. Mega info Media CoLtd is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,089  in Mega info Media CoLtd on October 26, 2024 and sell it today you would earn a total of  43.00  from holding Mega info Media CoLtd or generate 3.95% return on investment over 90 days.

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

Dongxing Sec Co  vs.  Mega info Media CoLtd

Dongxing Sec

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dongxing Sec Co are ranked lower than 2 (%) 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.

Mega info Media

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mega info Media CoLtd are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Mega Info may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Dongxing Sec and Mega Info

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

The idea behind Dongxing Sec Co and Mega info Media CoLtd 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.