Correlation Between Xiangyang Automobile and Dazhong Transportation
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By analyzing existing cross correlation between Xiangyang Automobile Bearing and Dazhong Transportation Group, you can compare the effects of market volatilities on Xiangyang Automobile and Dazhong Transportation 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 Xiangyang Automobile with a short position of Dazhong Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xiangyang Automobile and Dazhong Transportation.
Diversification Opportunities for Xiangyang Automobile and Dazhong Transportation
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Xiangyang and Dazhong is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Xiangyang Automobile Bearing and Dazhong Transportation Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dazhong Transportation and Xiangyang Automobile 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 Xiangyang Automobile Bearing are associated (or correlated) with Dazhong Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dazhong Transportation has no effect on the direction of Xiangyang Automobile i.e., Xiangyang Automobile and Dazhong Transportation go up and down completely randomly.
Pair Corralation between Xiangyang Automobile and Dazhong Transportation
Assuming the 90 days trading horizon Xiangyang Automobile is expected to generate 3.11 times less return on investment than Dazhong Transportation. In addition to that, Xiangyang Automobile is 1.28 times more volatile than Dazhong Transportation Group. It trades about 0.01 of its total potential returns per unit of risk. Dazhong Transportation Group is currently generating about 0.03 per unit of volatility. If you would invest 19.00 in Dazhong Transportation Group on October 16, 2024 and sell it today you would earn a total of 3.00 from holding Dazhong Transportation Group or generate 15.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xiangyang Automobile Bearing vs. Dazhong Transportation Group
Performance |
| Timeline |
| Xiangyang Automobile |
| Dazhong Transportation |
Xiangyang Automobile and Dazhong Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xiangyang Automobile and Dazhong Transportation
The main advantage of trading using opposite Xiangyang Automobile and Dazhong Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xiangyang Automobile position performs unexpectedly, Dazhong Transportation 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 Dazhong Transportation will offset losses from the drop in Dazhong Transportation's long position.The idea behind Xiangyang Automobile Bearing and Dazhong Transportation Group 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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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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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