Correlation Between DingZing Advanced and Advanced Wireless

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

Diversification Opportunities for DingZing Advanced and Advanced Wireless

0.44

Correlation Coefficient

DingZing Advanced  Advanced Wireless

Very weak diversification

The 3 months correlation between DingZing and Advanced is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding DingZing Advanced Materials and Advanced Wireless Semiconducto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Wireless 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 Advanced Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Wireless has no effect on the direction of DingZing Advanced i.e., DingZing Advanced and Advanced Wireless go up and down completely randomly.

Pair Corralation between DingZing Advanced and Advanced Wireless

Assuming the 90 days trading horizon DingZing Advanced Materials is expected to generate 0.69 times more return on investment than Advanced Wireless. However, DingZing Advanced Materials is 1.45 times less risky than Advanced Wireless. It trades about 0.16 of its potential returns per unit of risk. Advanced Wireless Semiconductor is currently generating about 0.02 per unit of risk. If you would invest  13,950  in DingZing Advanced Materials on October 21, 2024 and sell it today you would earn a total of  1,100  from holding DingZing Advanced Materials or generate 7.89% return on investment over 90 days.

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

DingZing Advanced Materials  vs.  Advanced Wireless Semiconducto

DingZing Advanced

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DingZing Advanced Materials are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, DingZing Advanced is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Advanced Wireless

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Wireless Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Advanced Wireless is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with DingZing Advanced and Advanced Wireless

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

The idea behind DingZing Advanced Materials and Advanced Wireless Semiconductor 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.