Correlation Between Dazhong Transportation and Dongguan Tarry
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By analyzing existing cross correlation between Dazhong Transportation Group and Dongguan Tarry Electronics, you can compare the effects of market volatilities on Dazhong Transportation and Dongguan Tarry 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 Dazhong Transportation with a short position of Dongguan Tarry. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dazhong Transportation and Dongguan Tarry.
Diversification Opportunities for Dazhong Transportation and Dongguan Tarry
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dazhong and Dongguan is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Dazhong Transportation Group and Dongguan Tarry Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongguan Tarry Elect and Dazhong Transportation 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 Dazhong Transportation Group are associated (or correlated) with Dongguan Tarry. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongguan Tarry Elect has no effect on the direction of Dazhong Transportation i.e., Dazhong Transportation and Dongguan Tarry go up and down completely randomly.
Pair Corralation between Dazhong Transportation and Dongguan Tarry
Assuming the 90 days trading horizon Dazhong Transportation Group is expected to generate 0.94 times more return on investment than Dongguan Tarry. However, Dazhong Transportation Group is 1.06 times less risky than Dongguan Tarry. It trades about 0.26 of its potential returns per unit of risk. Dongguan Tarry Electronics is currently generating about 0.06 per unit of risk. If you would invest 22.00 in Dazhong Transportation Group on November 29, 2024 and sell it today you would earn a total of 2.00 from holding Dazhong Transportation Group or generate 9.09% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Dazhong Transportation Group vs. Dongguan Tarry Electronics
Performance |
Timeline |
Dazhong Transportation |
Dongguan Tarry Elect |
Dazhong Transportation and Dongguan Tarry Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dazhong Transportation and Dongguan Tarry
The main advantage of trading using opposite Dazhong Transportation and Dongguan Tarry positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dazhong Transportation position performs unexpectedly, Dongguan Tarry 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 Dongguan Tarry will offset losses from the drop in Dongguan Tarry's long position.The idea behind Dazhong Transportation Group and Dongguan Tarry Electronics 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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Check out your portfolio center.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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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