Correlation Between Dosilicon and Nanning Chemical

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

By analyzing existing cross correlation between Dosilicon Co and Nanning Chemical Industry, you can compare the effects of market volatilities on Dosilicon and Nanning Chemical 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 Dosilicon with a short position of Nanning Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dosilicon and Nanning Chemical.

Diversification Opportunities for Dosilicon and Nanning Chemical

0.32

Correlation Coefficient

Dosilicon  Nanning Chemical

Weak diversification

The 3 months correlation between Dosilicon and Nanning is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Dosilicon Co and Nanning Chemical Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanning Chemical Industry and Dosilicon 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 Dosilicon Co are associated (or correlated) with Nanning Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanning Chemical Industry has no effect on the direction of Dosilicon i.e., Dosilicon and Nanning Chemical go up and down completely randomly.

Pair Corralation between Dosilicon and Nanning Chemical

Assuming the 90 days trading horizon Dosilicon Co is expected to generate 1.62 times more return on investment than Nanning Chemical. However, Dosilicon is 1.62 times more volatile than Nanning Chemical Industry. It trades about 0.03 of its potential returns per unit of risk. Nanning Chemical Industry is currently generating about -0.04 per unit of risk. If you would invest  2,452  in Dosilicon Co on October 8, 2024 and sell it today you would earn a total of  24.00  from holding Dosilicon Co or generate 0.98% return on investment over 90 days.

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

Dosilicon Co  vs.  Nanning Chemical Industry

Dosilicon

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dosilicon Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dosilicon may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nanning Chemical Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nanning Chemical Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Dosilicon and Nanning Chemical

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

The idea behind Dosilicon Co and Nanning Chemical Industry 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.