Correlation Between MICRONIC MYDATA and CN DATANG

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

By analyzing existing cross correlation between MICRONIC MYDATA and CN DATANG C, you can compare the effects of market volatilities on MICRONIC MYDATA and CN DATANG 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 MICRONIC MYDATA with a short position of CN DATANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of MICRONIC MYDATA and CN DATANG.

Diversification Opportunities for MICRONIC MYDATA and CN DATANG

0.33

Correlation Coefficient

MICRONIC MYDATA  CN DATANG

Weak diversification

The 3 months correlation between MICRONIC and DT7 is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding MICRONIC MYDATA and CN DATANG C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN DATANG C and MICRONIC MYDATA 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 MICRONIC MYDATA are associated (or correlated) with CN DATANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN DATANG C has no effect on the direction of MICRONIC MYDATA i.e., MICRONIC MYDATA and CN DATANG go up and down completely randomly.

Pair Corralation between MICRONIC MYDATA and CN DATANG

Assuming the 90 days trading horizon MICRONIC MYDATA is expected to generate 0.55 times more return on investment than CN DATANG. However, MICRONIC MYDATA is 1.81 times less risky than CN DATANG. It trades about 0.09 of its potential returns per unit of risk. CN DATANG C is currently generating about -0.01 per unit of risk. If you would invest  3,212  in MICRONIC MYDATA on October 7, 2024 and sell it today you would earn a total of  338.00  from holding MICRONIC MYDATA or generate 10.52% return on investment over 90 days.

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

MICRONIC MYDATA  vs.  CN DATANG C

MICRONIC MYDATA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in MICRONIC MYDATA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, MICRONIC MYDATA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CN DATANG C

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with MICRONIC MYDATA and CN DATANG

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

The idea behind MICRONIC MYDATA and CN DATANG C 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.