Correlation Between China Longyuan and Dongfeng Automobile
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By analyzing existing cross correlation between China Longyuan Power and Dongfeng Automobile Co, you can compare the effects of market volatilities on China Longyuan 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 Longyuan with a short position of Dongfeng Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Longyuan and Dongfeng Automobile.
Diversification Opportunities for China Longyuan and Dongfeng Automobile
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between China and Dongfeng is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding China Longyuan Power 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 Longyuan 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 Longyuan Power 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 Longyuan i.e., China Longyuan and Dongfeng Automobile go up and down completely randomly.
Pair Corralation between China Longyuan and Dongfeng Automobile
Assuming the 90 days trading horizon China Longyuan Power is expected to under-perform the Dongfeng Automobile. But the stock apears to be less risky and, when comparing its historical volatility, China Longyuan Power is 1.82 times less risky than Dongfeng Automobile. The stock trades about -0.14 of its potential returns per unit of risk. The Dongfeng Automobile Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 677.00 in Dongfeng Automobile Co on October 26, 2024 and sell it today you would earn a total of 15.00 from holding Dongfeng Automobile Co or generate 2.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Longyuan Power vs. Dongfeng Automobile Co
Performance |
| Timeline |
| China Longyuan Power |
| Dongfeng Automobile |
China Longyuan and Dongfeng Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Longyuan and Dongfeng Automobile
The main advantage of trading using opposite China Longyuan and Dongfeng Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Longyuan 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 Longyuan vs. Markor International Home | China Longyuan vs. Easyhome New Retail | China Longyuan vs. Xiamen Goldenhome Co | China Longyuan vs. Gifore Agricultural Machinery |
| Dongfeng Automobile vs. China Longyuan Power | Dongfeng Automobile vs. PetroChina Co Ltd | Dongfeng Automobile vs. Guangxi Guiguan Electric | Dongfeng Automobile vs. Yantai North Andre |
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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