Correlation Between Daoming OpticsChemical and China Life
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By analyzing existing cross correlation between Daoming OpticsChemical Co and China Life Insurance, you can compare the effects of market volatilities on Daoming OpticsChemical and China Life 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 China Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daoming OpticsChemical and China Life.
Diversification Opportunities for Daoming OpticsChemical and China Life
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Daoming and China is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Daoming OpticsChemical Co and China Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Life Insurance 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 China Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Life Insurance has no effect on the direction of Daoming OpticsChemical i.e., Daoming OpticsChemical and China Life go up and down completely randomly.
Pair Corralation between Daoming OpticsChemical and China Life
Assuming the 90 days trading horizon Daoming OpticsChemical Co is expected to generate 2.17 times more return on investment than China Life. However, Daoming OpticsChemical is 2.17 times more volatile than China Life Insurance. It trades about 0.2 of its potential returns per unit of risk. China Life Insurance is currently generating about -0.1 per unit of risk. If you would invest 846.00 in Daoming OpticsChemical Co on December 8, 2024 and sell it today you would earn a total of 119.00 from holding Daoming OpticsChemical Co or generate 14.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daoming OpticsChemical Co vs. China Life Insurance
Performance |
| Timeline |
| Daoming OpticsChemical |
| China Life Insurance |
Daoming OpticsChemical and China Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daoming OpticsChemical and China Life
The main advantage of trading using opposite Daoming OpticsChemical and China Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daoming OpticsChemical position performs unexpectedly, China Life 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 China Life will offset losses from the drop in China Life's long position.The idea behind Daoming OpticsChemical Co and China Life Insurance 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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