Correlation Between DONGJIANG ENVIRONMENTAL and ANGANG STEEL

Can any of the company-specific risk be diversified away by investing in both DONGJIANG ENVIRONMENTAL and ANGANG STEEL 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 DONGJIANG ENVIRONMENTAL and ANGANG STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DONGJIANG ENVIRONMENTAL H and ANGANG STEEL H , you can compare the effects of market volatilities on DONGJIANG ENVIRONMENTAL and ANGANG STEEL 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 DONGJIANG ENVIRONMENTAL with a short position of ANGANG STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of DONGJIANG ENVIRONMENTAL and ANGANG STEEL.

Diversification Opportunities for DONGJIANG ENVIRONMENTAL and ANGANG STEEL

0.24

Correlation Coefficient

DONGJIANG ENVIRONMENTAL  ANGANG STEEL

Modest diversification

The 3 months correlation between DONGJIANG and ANGANG is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding DONGJIANG ENVIRONMENTAL H and ANGANG STEEL H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANGANG STEEL H and DONGJIANG ENVIRONMENTAL 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 DONGJIANG ENVIRONMENTAL H are associated (or correlated) with ANGANG STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANGANG STEEL H has no effect on the direction of DONGJIANG ENVIRONMENTAL i.e., DONGJIANG ENVIRONMENTAL and ANGANG STEEL go up and down completely randomly.

Pair Corralation between DONGJIANG ENVIRONMENTAL and ANGANG STEEL

Assuming the 90 days horizon DONGJIANG ENVIRONMENTAL is expected to generate 1.7 times less return on investment than ANGANG STEEL. In addition to that, DONGJIANG ENVIRONMENTAL is 2.38 times more volatile than ANGANG STEEL H . It trades about 0.03 of its total potential returns per unit of risk. ANGANG STEEL H is currently generating about 0.13 per unit of volatility. If you would invest  18.00  in ANGANG STEEL H on December 22, 2024 and sell it today you would earn a total of  5.00  from holding ANGANG STEEL H or generate 27.78% return on investment over 90 days.

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

DONGJIANG ENVIRONMENTAL H  vs.  ANGANG STEEL H

DONGJIANG ENVIRONMENTAL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DONGJIANG ENVIRONMENTAL H are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DONGJIANG ENVIRONMENTAL reported solid returns over the last few months and may actually be approaching a breakup point.

ANGANG STEEL H

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ANGANG STEEL H are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ANGANG STEEL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DONGJIANG ENVIRONMENTAL and ANGANG STEEL

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

The idea behind DONGJIANG ENVIRONMENTAL H and ANGANG STEEL H 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.