Correlation Between Dongjiang Environmental and China Reform
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By analyzing existing cross correlation between Dongjiang Environmental Co and China Reform Health, you can compare the effects of market volatilities on Dongjiang Environmental and China Reform 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 Dongjiang Environmental with a short position of China Reform. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongjiang Environmental and China Reform.
Diversification Opportunities for Dongjiang Environmental and China Reform
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dongjiang and China is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Dongjiang Environmental Co and China Reform Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Reform Health and Dongjiang Environmental 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 Dongjiang Environmental Co are associated (or correlated) with China Reform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Reform Health has no effect on the direction of Dongjiang Environmental i.e., Dongjiang Environmental and China Reform go up and down completely randomly.
Pair Corralation between Dongjiang Environmental and China Reform
Assuming the 90 days trading horizon Dongjiang Environmental is expected to generate 15.81 times less return on investment than China Reform. But when comparing it to its historical volatility, Dongjiang Environmental Co is 1.29 times less risky than China Reform. It trades about 0.0 of its potential returns per unit of risk. China Reform Health is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,318 in China Reform Health on August 25, 2024 and sell it today you would earn a total of 36.00 from holding China Reform Health or generate 2.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongjiang Environmental Co vs. China Reform Health
Performance |
| Timeline |
| Dongjiang Environmental |
| China Reform Health |
Dongjiang Environmental and China Reform Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongjiang Environmental and China Reform
The main advantage of trading using opposite Dongjiang Environmental and China Reform positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongjiang Environmental position performs unexpectedly, China Reform 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 Reform will offset losses from the drop in China Reform's long position.| Dongjiang Environmental vs. China Petroleum Chemical | Dongjiang Environmental vs. PetroChina Co Ltd | Dongjiang Environmental vs. China State Construction | Dongjiang Environmental vs. China Railway Group |
| China Reform vs. ZYF Lopsking Aluminum | China Reform vs. Jiangxi JDL Environmental | China Reform vs. Hang Xiao Steel | China Reform vs. Dongjiang Environmental Co |
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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