Correlation Between Datang International and Lion Biotechnologies
Can any of the company-specific risk be diversified away by investing in both Datang International and Lion Biotechnologies 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 Datang International and Lion Biotechnologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datang International Power and Lion Biotechnologies, you can compare the effects of market volatilities on Datang International and Lion Biotechnologies 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 Datang International with a short position of Lion Biotechnologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang International and Lion Biotechnologies.
Diversification Opportunities for Datang International and Lion Biotechnologies
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Datang and Lion is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Datang International Power and Lion Biotechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion Biotechnologies and Datang International 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 Datang International Power are associated (or correlated) with Lion Biotechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion Biotechnologies has no effect on the direction of Datang International i.e., Datang International and Lion Biotechnologies go up and down completely randomly.
Pair Corralation between Datang International and Lion Biotechnologies
Assuming the 90 days horizon Datang International Power is expected to generate 0.51 times more return on investment than Lion Biotechnologies. However, Datang International Power is 1.95 times less risky than Lion Biotechnologies. It trades about 0.11 of its potential returns per unit of risk. Lion Biotechnologies is currently generating about -0.36 per unit of risk. If you would invest 17.00 in Datang International Power on December 28, 2024 and sell it today you would earn a total of 1.00 from holding Datang International Power or generate 5.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Datang International Power vs. Lion Biotechnologies
Performance |
Timeline |
Datang International |
Lion Biotechnologies |
Datang International and Lion Biotechnologies Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Datang International and Lion Biotechnologies
The main advantage of trading using opposite Datang International and Lion Biotechnologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datang International position performs unexpectedly, Lion Biotechnologies 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 Lion Biotechnologies will offset losses from the drop in Lion Biotechnologies' long position.Datang International vs. United Airlines Holdings | Datang International vs. American Airlines Group | Datang International vs. Eidesvik Offshore ASA | Datang International vs. SBM OFFSHORE |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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