Correlation Between China Reform and Dongfeng Automobile
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By analyzing existing cross correlation between China Reform Health and Dongfeng Automobile Co, you can compare the effects of market volatilities on China Reform and Dongfeng Automobile 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 Reform with a short position of Dongfeng Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Reform and Dongfeng Automobile.
Diversification Opportunities for China Reform and Dongfeng Automobile
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Dongfeng is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding China Reform Health and Dongfeng Automobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongfeng Automobile and China Reform 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 Reform Health are associated (or correlated) with Dongfeng Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongfeng Automobile has no effect on the direction of China Reform i.e., China Reform and Dongfeng Automobile go up and down completely randomly.
Pair Corralation between China Reform and Dongfeng Automobile
Assuming the 90 days trading horizon China Reform Health is expected to under-perform the Dongfeng Automobile. In addition to that, China Reform is 1.12 times more volatile than Dongfeng Automobile Co. It trades about -0.03 of its total potential returns per unit of risk. Dongfeng Automobile Co is currently generating about 0.09 per unit of volatility. If you would invest 677.00 in Dongfeng Automobile Co on August 29, 2024 and sell it today you would earn a total of 48.00 from holding Dongfeng Automobile Co or generate 7.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Reform Health vs. Dongfeng Automobile Co
Performance |
| Timeline |
| China Reform Health |
| Dongfeng Automobile |
China Reform and Dongfeng Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Reform and Dongfeng Automobile
The main advantage of trading using opposite China Reform and Dongfeng Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Reform position performs unexpectedly, Dongfeng Automobile 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 Automobile will offset losses from the drop in Dongfeng Automobile's long position.| China Reform vs. Industrial and Commercial | China Reform vs. China Construction Bank | China Reform vs. Agricultural Bank of | China Reform vs. Bank of China |
| Dongfeng Automobile vs. Zhengzhou Qianweiyangchu Food | Dongfeng Automobile vs. Impulse Qingdao Health | Dongfeng Automobile vs. Yankershop Food Co | Dongfeng Automobile vs. Healthcare Co |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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