Correlation Between Intuitive Machines and Dongfeng

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

By analyzing existing cross correlation between Intuitive Machines and Dongfeng Group, you can compare the effects of market volatilities on Intuitive Machines and Dongfeng 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 Intuitive Machines with a short position of Dongfeng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intuitive Machines and Dongfeng.

Diversification Opportunities for Intuitive Machines and Dongfeng

0.77

Correlation Coefficient

Intuitive Machines  Dongfeng

Poor diversification

The 3 months correlation between Intuitive and Dongfeng is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Intuitive Machines and Dongfeng Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongfeng Group and Intuitive Machines 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 Intuitive Machines are associated (or correlated) with Dongfeng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongfeng Group has no effect on the direction of Intuitive Machines i.e., Intuitive Machines and Dongfeng go up and down completely randomly.

Pair Corralation between Intuitive Machines and Dongfeng

Given the investment horizon of 90 days Intuitive Machines is expected to generate 3.09 times more return on investment than Dongfeng. However, Intuitive Machines is 3.09 times more volatile than Dongfeng Group. It trades about 0.05 of its potential returns per unit of risk. Dongfeng Group is currently generating about 0.02 per unit of risk. If you would invest  1,002  in Intuitive Machines on September 19, 2024 and sell it today you would earn a total of  313.00  from holding Intuitive Machines or generate 31.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Intuitive Machines  vs.  Dongfeng Group

Intuitive Machines

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Intuitive Machines are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Intuitive Machines reported solid returns over the last few months and may actually be approaching a breakup point.

Dongfeng Group

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dongfeng Group are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal technical and fundamental indicators, Dongfeng reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Intuitive Machines and Dongfeng

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

The idea behind Intuitive Machines and Dongfeng Group 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.

Check out your portfolio center.

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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.