Correlation Between Post and Ducgiang Chemicals

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

By analyzing existing cross correlation between Post and Telecommunications and Ducgiang Chemicals Detergent, you can compare the effects of market volatilities on Post and Ducgiang Chemicals 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 Post with a short position of Ducgiang Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Post and Ducgiang Chemicals.

Diversification Opportunities for Post and Ducgiang Chemicals

-0.12

Correlation Coefficient

Post  Ducgiang Chemicals

Good diversification

The 3 months correlation between Post and Ducgiang is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Post and Telecommunications and Ducgiang Chemicals Detergent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ducgiang Chemicals and Post 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 Post and Telecommunications are associated (or correlated) with Ducgiang Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ducgiang Chemicals has no effect on the direction of Post i.e., Post and Ducgiang Chemicals go up and down completely randomly.

Pair Corralation between Post and Ducgiang Chemicals

Assuming the 90 days trading horizon Post and Telecommunications is expected to generate 2.95 times more return on investment than Ducgiang Chemicals. However, Post is 2.95 times more volatile than Ducgiang Chemicals Detergent. It trades about 0.4 of its potential returns per unit of risk. Ducgiang Chemicals Detergent is currently generating about 0.12 per unit of risk. If you would invest  439,000  in Post and Telecommunications on December 4, 2024 and sell it today you would earn a total of  126,000  from holding Post and Telecommunications or generate 28.7% return on investment over 90 days.

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

Post and Telecommunications  vs.  Ducgiang Chemicals Detergent

Post and Telecommuni

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Post and Telecommunications are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Post displayed solid returns over the last few months and may actually be approaching a breakup point.

Ducgiang Chemicals

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ducgiang Chemicals Detergent are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Ducgiang Chemicals is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Post and Ducgiang Chemicals

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

The idea behind Post and Telecommunications and Ducgiang Chemicals Detergent 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.