Correlation Between DATANG INTL and Wharf Real

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

By analyzing existing cross correlation between DATANG INTL POW and Wharf Real Estate, you can compare the effects of market volatilities on DATANG INTL and Wharf Real 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 INTL with a short position of Wharf Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATANG INTL and Wharf Real.

Diversification Opportunities for DATANG INTL and Wharf Real

0.7

Correlation Coefficient

DATANG INTL  Wharf Real

Poor diversification

The 3 months correlation between DATANG and Wharf is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding DATANG INTL POW and Wharf Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wharf Real Estate and DATANG INTL 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 INTL POW are associated (or correlated) with Wharf Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wharf Real Estate has no effect on the direction of DATANG INTL i.e., DATANG INTL and Wharf Real go up and down completely randomly.

Pair Corralation between DATANG INTL and Wharf Real

Assuming the 90 days trading horizon DATANG INTL POW is expected to generate 2.06 times more return on investment than Wharf Real. However, DATANG INTL is 2.06 times more volatile than Wharf Real Estate. It trades about -0.01 of its potential returns per unit of risk. Wharf Real Estate is currently generating about -0.19 per unit of risk. If you would invest  17.00  in DATANG INTL POW on October 15, 2024 and sell it today you would lose (1.00) from holding DATANG INTL POW or give up 5.88% of portfolio value over 90 days.

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

DATANG INTL POW  vs.  Wharf Real Estate

DATANG INTL POW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DATANG INTL POW has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, DATANG INTL is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Wharf Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wharf Real Estate has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with DATANG INTL and Wharf Real

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

The idea behind DATANG INTL POW and Wharf Real Estate 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.