Correlation Between Datang International and RADIANCE HLDGS

Can any of the company-specific risk be diversified away by investing in both Datang International and RADIANCE HLDGS 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 RADIANCE HLDGS 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 RADIANCE HLDGS GRPHD 01, you can compare the effects of market volatilities on Datang International and RADIANCE HLDGS 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 RADIANCE HLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang International and RADIANCE HLDGS.

Diversification Opportunities for Datang International and RADIANCE HLDGS

0.49

Correlation Coefficient

Datang International  RADIANCE HLDGS

Very weak diversification

The 3 months correlation between Datang and RADIANCE is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Datang International Power and RADIANCE HLDGS GRPHD 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on RADIANCE HLDGS GRPHD 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 RADIANCE HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of RADIANCE HLDGS GRPHD has no effect on the direction of Datang International i.e., Datang International and RADIANCE HLDGS go up and down completely randomly.

Pair Corralation between Datang International and RADIANCE HLDGS

Assuming the 90 days horizon Datang International Power is expected to generate 1.29 times more return on investment than RADIANCE HLDGS. However, Datang International is 1.29 times more volatile than RADIANCE HLDGS GRPHD 01. It trades about -0.1 of its potential returns per unit of risk. RADIANCE HLDGS GRPHD 01 is currently generating about -0.27 per unit of risk. If you would invest  17.00  in Datang International Power on October 15, 2024 and sell it today you would lose (1.00) from holding Datang International Power or give up 5.88% of portfolio value over 90 days.

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

Datang International Power  vs.  RADIANCE HLDGS GRPHD 01

Datang International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Datang International Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Datang International is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

RADIANCE HLDGS GRPHD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RADIANCE HLDGS GRPHD 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, RADIANCE HLDGS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Datang International and RADIANCE HLDGS

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

The idea behind Datang International Power and RADIANCE HLDGS GRPHD 01 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.