Correlation Between Daoming OpticsChemical and Zhejiang Yinlun
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By analyzing existing cross correlation between Daoming OpticsChemical Co and Zhejiang Yinlun Machinery, you can compare the effects of market volatilities on Daoming OpticsChemical and Zhejiang Yinlun 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 Daoming OpticsChemical with a short position of Zhejiang Yinlun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daoming OpticsChemical and Zhejiang Yinlun.
Diversification Opportunities for Daoming OpticsChemical and Zhejiang Yinlun
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Daoming and Zhejiang is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Daoming OpticsChemical Co and Zhejiang Yinlun Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Yinlun Machinery and Daoming OpticsChemical 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 Daoming OpticsChemical Co are associated (or correlated) with Zhejiang Yinlun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Yinlun Machinery has no effect on the direction of Daoming OpticsChemical i.e., Daoming OpticsChemical and Zhejiang Yinlun go up and down completely randomly.
Pair Corralation between Daoming OpticsChemical and Zhejiang Yinlun
Assuming the 90 days trading horizon Daoming OpticsChemical is expected to generate 2.39 times less return on investment than Zhejiang Yinlun. But when comparing it to its historical volatility, Daoming OpticsChemical Co is 1.23 times less risky than Zhejiang Yinlun. It trades about 0.14 of its potential returns per unit of risk. Zhejiang Yinlun Machinery is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,787 in Zhejiang Yinlun Machinery on November 7, 2024 and sell it today you would earn a total of 229.00 from holding Zhejiang Yinlun Machinery or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daoming OpticsChemical Co vs. Zhejiang Yinlun Machinery
Performance |
| Timeline |
| Daoming OpticsChemical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Zhejiang Yinlun Machinery |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Daoming OpticsChemical and Zhejiang Yinlun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daoming OpticsChemical and Zhejiang Yinlun
The main advantage of trading using opposite Daoming OpticsChemical and Zhejiang Yinlun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daoming OpticsChemical position performs unexpectedly, Zhejiang Yinlun 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 Zhejiang Yinlun will offset losses from the drop in Zhejiang Yinlun's long position.The idea behind Daoming OpticsChemical Co and Zhejiang Yinlun Machinery 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.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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