Correlation Between Datang International and LIFE +
Can any of the company-specific risk be diversified away by investing in both Datang International and LIFE + 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 LIFE + 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 LIFE BANC SPLIT, you can compare the effects of market volatilities on Datang International and LIFE + 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 LIFE +. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang International and LIFE +.
Diversification Opportunities for Datang International and LIFE +
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Datang and LIFE is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Datang International Power and LIFE BANC SPLIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIFE BANC SPLIT 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 LIFE +. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIFE BANC SPLIT has no effect on the direction of Datang International i.e., Datang International and LIFE + go up and down completely randomly.
Pair Corralation between Datang International and LIFE +
Assuming the 90 days horizon Datang International Power is expected to generate 1.18 times more return on investment than LIFE +. However, Datang International is 1.18 times more volatile than LIFE BANC SPLIT. It trades about 0.04 of its potential returns per unit of risk. LIFE BANC SPLIT is currently generating about -0.02 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 | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Datang International Power vs. LIFE BANC SPLIT
Performance |
Timeline |
Datang International |
LIFE BANC SPLIT |
Datang International and LIFE + Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Datang International and LIFE +
The main advantage of trading using opposite Datang International and LIFE + positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datang International position performs unexpectedly, LIFE + 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 LIFE + will offset losses from the drop in LIFE +'s 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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