Correlation Between Dongxing Sec and Heilongjiang Publishing

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

Diversification Opportunities for Dongxing Sec and Heilongjiang Publishing

0.39

Correlation Coefficient

Dongxing Sec  Heilongjiang Publishing

Weak diversification

The 3 months correlation between Dongxing and Heilongjiang is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Dongxing Sec Co and Heilongjiang Publishing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heilongjiang Publishing 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 Heilongjiang Publishing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heilongjiang Publishing has no effect on the direction of Dongxing Sec i.e., Dongxing Sec and Heilongjiang Publishing go up and down completely randomly.

Pair Corralation between Dongxing Sec and Heilongjiang Publishing

Assuming the 90 days trading horizon Dongxing Sec Co is expected to generate 0.91 times more return on investment than Heilongjiang Publishing. However, Dongxing Sec Co is 1.09 times less risky than Heilongjiang Publishing. It trades about 0.05 of its potential returns per unit of risk. Heilongjiang Publishing Media is currently generating about 0.01 per unit of risk. If you would invest  1,023  in Dongxing Sec Co on October 23, 2024 and sell it today you would earn a total of  71.00  from holding Dongxing Sec Co or generate 6.94% 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.  Heilongjiang Publishing Media

Dongxing Sec

Risk-Adjusted Performance

3 of 100

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.

Heilongjiang Publishing

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Dongxing Sec Co and Heilongjiang Publishing Media 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.