Correlation Between Dongxing Sec and Cultural Investment

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

Diversification Opportunities for Dongxing Sec and Cultural Investment

-0.03

Correlation Coefficient

Dongxing Sec  Cultural Investment

Good diversification

The 3 months correlation between Dongxing and Cultural is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Dongxing Sec Co and Cultural Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cultural 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 Cultural Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cultural Investment has no effect on the direction of Dongxing Sec i.e., Dongxing Sec and Cultural Investment go up and down completely randomly.

Pair Corralation between Dongxing Sec and Cultural Investment

Assuming the 90 days trading horizon Dongxing Sec Co is expected to generate 1.34 times more return on investment than Cultural Investment. However, Dongxing Sec is 1.34 times more volatile than Cultural Investment Holdings. It trades about 0.02 of its potential returns per unit of risk. Cultural Investment Holdings is currently generating about 0.01 per unit of risk. If you would invest  1,174  in Dongxing Sec Co on December 27, 2024 and sell it today you would earn a total of  6.00  from holding Dongxing Sec Co or generate 0.51% return on investment over 90 days.

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

Dongxing Sec Co  vs.  Cultural Investment Holdings

Dongxing Sec

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dongxing Sec Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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.

Cultural Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cultural Investment Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cultural Investment 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 Cultural Investment

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

The idea behind Dongxing Sec Co and Cultural Investment Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.