Correlation Between Digital China and Guangdong Tianhe
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By analyzing existing cross correlation between Digital China Information and Guangdong Tianhe Agricultural, you can compare the effects of market volatilities on Digital China and Guangdong Tianhe 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 Digital China with a short position of Guangdong Tianhe. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital China and Guangdong Tianhe.
Diversification Opportunities for Digital China and Guangdong Tianhe
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Digital and Guangdong is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Digital China Information and Guangdong Tianhe Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Tianhe Agr and Digital China 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 Digital China Information are associated (or correlated) with Guangdong Tianhe. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Tianhe Agr has no effect on the direction of Digital China i.e., Digital China and Guangdong Tianhe go up and down completely randomly.
Pair Corralation between Digital China and Guangdong Tianhe
Assuming the 90 days trading horizon Digital China Information is expected to generate 1.3 times more return on investment than Guangdong Tianhe. However, Digital China is 1.3 times more volatile than Guangdong Tianhe Agricultural. It trades about -0.32 of its potential returns per unit of risk. Guangdong Tianhe Agricultural is currently generating about -0.42 per unit of risk. If you would invest 1,260 in Digital China Information on October 15, 2024 and sell it today you would lose (280.00) from holding Digital China Information or give up 22.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital China Information vs. Guangdong Tianhe Agricultural
Performance |
| Timeline |
| Digital China Information |
| Guangdong Tianhe Agr |
Digital China and Guangdong Tianhe Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital China and Guangdong Tianhe
The main advantage of trading using opposite Digital China and Guangdong Tianhe positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital China position performs unexpectedly, Guangdong Tianhe 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 Guangdong Tianhe will offset losses from the drop in Guangdong Tianhe's long position.| Digital China vs. Eyebright Medical Technology | Digital China vs. Linewell Software Co | Digital China vs. Shanghai Newtouch Software | Digital China vs. HUAQIN TECHNOLOGY LTD |
| Guangdong Tianhe vs. Penyao Environmental Protection | Guangdong Tianhe vs. GreenTech Environmental Co | Guangdong Tianhe vs. Zoy Home Furnishing | Guangdong Tianhe vs. Fujian Nanwang Environment |
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.
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