Correlation Between Shaanxi Energy and Digital China
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By analyzing existing cross correlation between Shaanxi Energy Investment and Digital China Information, you can compare the effects of market volatilities on Shaanxi Energy and Digital China 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 Shaanxi Energy with a short position of Digital China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shaanxi Energy and Digital China.
Diversification Opportunities for Shaanxi Energy and Digital China
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shaanxi and Digital is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Shaanxi Energy Investment and Digital China Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital China Information and Shaanxi Energy 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 Shaanxi Energy Investment are associated (or correlated) with Digital China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital China Information has no effect on the direction of Shaanxi Energy i.e., Shaanxi Energy and Digital China go up and down completely randomly.
Pair Corralation between Shaanxi Energy and Digital China
Assuming the 90 days trading horizon Shaanxi Energy Investment is expected to under-perform the Digital China. But the stock apears to be less risky and, when comparing its historical volatility, Shaanxi Energy Investment is 3.14 times less risky than Digital China. The stock trades about -0.08 of its potential returns per unit of risk. The Digital China Information is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,271 in Digital China Information on September 14, 2024 and sell it today you would earn a total of 136.00 from holding Digital China Information or generate 10.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shaanxi Energy Investment vs. Digital China Information
Performance |
| Timeline |
| Shaanxi Energy Investment |
| Digital China Information |
Shaanxi Energy and Digital China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shaanxi Energy and Digital China
The main advantage of trading using opposite Shaanxi Energy and Digital China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shaanxi Energy position performs unexpectedly, Digital China 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 Digital China will offset losses from the drop in Digital China's long position.| Shaanxi Energy vs. Zhejiang Kingland Pipeline | Shaanxi Energy vs. HOB Biotech Group | Shaanxi Energy vs. Ming Yang Smart | Shaanxi Energy vs. 159681 |
| Digital China vs. China Petroleum Chemical | Digital China vs. PetroChina Co Ltd | Digital China vs. China State Construction | Digital China vs. China Railway Group |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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