Correlation Between Stewart Information and DATANG INTL

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

By analyzing existing cross correlation between Stewart Information Services and DATANG INTL POW, you can compare the effects of market volatilities on Stewart Information and DATANG INTL 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 Stewart Information with a short position of DATANG INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stewart Information and DATANG INTL.

Diversification Opportunities for Stewart Information and DATANG INTL

-0.4

Correlation Coefficient

Stewart Information  DATANG INTL

Very good diversification

The 3 months correlation between Stewart and DATANG is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Stewart Information Services and DATANG INTL POW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATANG INTL POW and Stewart Information 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 Stewart Information Services are associated (or correlated) with DATANG INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATANG INTL POW has no effect on the direction of Stewart Information i.e., Stewart Information and DATANG INTL go up and down completely randomly.

Pair Corralation between Stewart Information and DATANG INTL

Assuming the 90 days horizon Stewart Information is expected to generate 1.16 times less return on investment than DATANG INTL. But when comparing it to its historical volatility, Stewart Information Services is 2.09 times less risky than DATANG INTL. It trades about 0.06 of its potential returns per unit of risk. DATANG INTL POW is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  12.00  in DATANG INTL POW on October 5, 2024 and sell it today you would earn a total of  4.00  from holding DATANG INTL POW or generate 33.33% return on investment over 90 days.

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

Stewart Information Services  vs.  DATANG INTL POW

Stewart Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stewart Information Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Stewart Information is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

DATANG INTL POW

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DATANG INTL POW has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Stewart Information and DATANG INTL

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

The idea behind Stewart Information Services and DATANG INTL POW 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.