Correlation Between DingZing Advanced and United Radiant

Can any of the company-specific risk be diversified away by investing in both DingZing Advanced and United Radiant 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 DingZing Advanced and United Radiant into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DingZing Advanced Materials and United Radiant Technology, you can compare the effects of market volatilities on DingZing Advanced and United Radiant 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 DingZing Advanced with a short position of United Radiant. Check out your portfolio center. Please also check ongoing floating volatility patterns of DingZing Advanced and United Radiant.

Diversification Opportunities for DingZing Advanced and United Radiant

0.26

Correlation Coefficient

DingZing Advanced  United Radiant

Modest diversification

The 3 months correlation between DingZing and United is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding DingZing Advanced Materials and United Radiant Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Radiant Technology and DingZing Advanced 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 DingZing Advanced Materials are associated (or correlated) with United Radiant. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Radiant Technology has no effect on the direction of DingZing Advanced i.e., DingZing Advanced and United Radiant go up and down completely randomly.

Pair Corralation between DingZing Advanced and United Radiant

Assuming the 90 days trading horizon DingZing Advanced Materials is expected to generate 1.34 times more return on investment than United Radiant. However, DingZing Advanced is 1.34 times more volatile than United Radiant Technology. It trades about 0.1 of its potential returns per unit of risk. United Radiant Technology is currently generating about 0.13 per unit of risk. If you would invest  14,400  in DingZing Advanced Materials on December 24, 2024 and sell it today you would earn a total of  1,650  from holding DingZing Advanced Materials or generate 11.46% return on investment over 90 days.

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

DingZing Advanced Materials  vs.  United Radiant Technology

DingZing Advanced

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in DingZing Advanced Materials are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, DingZing Advanced showed solid returns over the last few months and may actually be approaching a breakup point.

United Radiant Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in United Radiant Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, United Radiant showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DingZing Advanced and United Radiant

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

The idea behind DingZing Advanced Materials and United Radiant 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.