Correlation Between China Region and Dws Emerging

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

By analyzing existing cross correlation between China Region Fund and Dws Emerging Markets, you can compare the effects of market volatilities on China Region and Dws Emerging 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 China Region with a short position of Dws Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Region and Dws Emerging.

Diversification Opportunities for China Region and Dws Emerging

0.0

Correlation Coefficient

China Region  Dws Emerging

Pay attention - limited upside

The 3 months correlation between China and DWS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Region Fund and Dws Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dws Emerging Markets and China Region 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 China Region Fund are associated (or correlated) with Dws Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dws Emerging Markets has no effect on the direction of China Region i.e., China Region and Dws Emerging go up and down completely randomly.

Pair Corralation between China Region and Dws Emerging

If you would invest  1,845  in Dws Emerging Markets on December 19, 2024 and sell it today you would earn a total of  66.00  from holding Dws Emerging Markets or generate 3.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

China Region Fund  vs.  Dws Emerging Markets

China Region

Risk-Adjusted Performance

Very Weak

Over the last 90 days China Region Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, China Region is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Dws Emerging Markets

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dws Emerging Markets are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Dws Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with China Region and Dws Emerging

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

The idea behind China Region Fund and Dws Emerging Markets 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.