Correlation Between Digital China and Gansu Jiu
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By analyzing existing cross correlation between Digital China Information and Gansu Jiu Steel, you can compare the effects of market volatilities on Digital China and Gansu Jiu 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 Gansu Jiu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital China and Gansu Jiu.
Diversification Opportunities for Digital China and Gansu Jiu
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Digital and Gansu is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Digital China Information and Gansu Jiu Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gansu Jiu Steel 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 Gansu Jiu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gansu Jiu Steel has no effect on the direction of Digital China i.e., Digital China and Gansu Jiu go up and down completely randomly.
Pair Corralation between Digital China and Gansu Jiu
Assuming the 90 days trading horizon Digital China is expected to generate 1.32 times less return on investment than Gansu Jiu. In addition to that, Digital China is 1.37 times more volatile than Gansu Jiu Steel. It trades about 0.08 of its total potential returns per unit of risk. Gansu Jiu Steel is currently generating about 0.15 per unit of volatility. If you would invest 179.00 in Gansu Jiu Steel on September 13, 2024 and sell it today you would earn a total of 14.00 from holding Gansu Jiu Steel or generate 7.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital China Information vs. Gansu Jiu Steel
Performance |
| Timeline |
| Digital China Information |
| Gansu Jiu Steel |
Digital China and Gansu Jiu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital China and Gansu Jiu
The main advantage of trading using opposite Digital China and Gansu Jiu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital China position performs unexpectedly, Gansu Jiu 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 Gansu Jiu will offset losses from the drop in Gansu Jiu's long position.| Digital China vs. China Petroleum Chemical | Digital China vs. PetroChina Co Ltd | Digital China vs. China State Construction | Digital China vs. China Railway Group |
| Gansu Jiu vs. China Construction Bank | Gansu Jiu vs. Industrial Bank Co | Gansu Jiu vs. Gansu Huangtai Wine marketing | Gansu Jiu vs. Guosheng Financial Holding |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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