Correlation Between RETAIL FOOD and DONGJIANG ENVIRONMENTAL

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

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

Diversification Opportunities for RETAIL FOOD and DONGJIANG ENVIRONMENTAL

0.74

Correlation Coefficient

RETAIL FOOD  DONGJIANG ENVIRONMENTAL

Poor diversification

The 3 months correlation between RETAIL and DONGJIANG is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding RETAIL FOOD GROUP and DONGJIANG ENVIRONMENTAL H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DONGJIANG ENVIRONMENTAL and RETAIL FOOD 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 RETAIL FOOD GROUP are associated (or correlated) with DONGJIANG ENVIRONMENTAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DONGJIANG ENVIRONMENTAL has no effect on the direction of RETAIL FOOD i.e., RETAIL FOOD and DONGJIANG ENVIRONMENTAL go up and down completely randomly.

Pair Corralation between RETAIL FOOD and DONGJIANG ENVIRONMENTAL

Assuming the 90 days trading horizon RETAIL FOOD GROUP is expected to generate 0.98 times more return on investment than DONGJIANG ENVIRONMENTAL. However, RETAIL FOOD GROUP is 1.02 times less risky than DONGJIANG ENVIRONMENTAL. It trades about -0.21 of its potential returns per unit of risk. DONGJIANG ENVIRONMENTAL H is currently generating about -0.31 per unit of risk. If you would invest  144.00  in RETAIL FOOD GROUP on October 26, 2024 and sell it today you would lose (14.00) from holding RETAIL FOOD GROUP or give up 9.72% of portfolio value over 90 days.

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

RETAIL FOOD GROUP  vs.  DONGJIANG ENVIRONMENTAL H

RETAIL FOOD GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days RETAIL FOOD GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

DONGJIANG ENVIRONMENTAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DONGJIANG ENVIRONMENTAL H 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 RETAIL FOOD and DONGJIANG ENVIRONMENTAL

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

The idea behind RETAIL FOOD GROUP and DONGJIANG ENVIRONMENTAL 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.