Correlation Between DATANG INTL and SILEON AB

Can any of the company-specific risk be diversified away by investing in both DATANG INTL and SILEON AB 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 SILEON AB 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 SILEON AB ON, you can compare the effects of market volatilities on DATANG INTL and SILEON AB 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 SILEON AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATANG INTL and SILEON AB.

Diversification Opportunities for DATANG INTL and SILEON AB

0.17

Correlation Coefficient

DATANG INTL  SILEON AB

Average diversification

The 3 months correlation between DATANG and SILEON is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding DATANG INTL POW and SILEON AB ON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SILEON AB ON 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 SILEON AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SILEON AB ON has no effect on the direction of DATANG INTL i.e., DATANG INTL and SILEON AB go up and down completely randomly.

Pair Corralation between DATANG INTL and SILEON AB

Assuming the 90 days trading horizon DATANG INTL POW is expected to generate 0.69 times more return on investment than SILEON AB. However, DATANG INTL POW is 1.45 times less risky than SILEON AB. It trades about -0.08 of its potential returns per unit of risk. SILEON AB ON is currently generating about -0.56 per unit of risk. If you would invest  17.00  in DATANG INTL POW on October 6, 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	Insignificant
Accuracy	94.12%
Values	Daily Returns

DATANG INTL POW  vs.  SILEON AB ON

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 uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

SILEON AB ON

Risk-Adjusted Performance

0 of 100

Strong

Over the last 90 days SILEON AB ON has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, SILEON AB reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DATANG INTL and SILEON AB

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

The idea behind DATANG INTL POW and SILEON AB ON 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.