Correlation Between Dongjiang Environmental and Shenzhen MYS
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By analyzing existing cross correlation between Dongjiang Environmental Co and Shenzhen MYS Environmental, you can compare the effects of market volatilities on Dongjiang Environmental and Shenzhen MYS 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 Shenzhen MYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongjiang Environmental and Shenzhen MYS.
Diversification Opportunities for Dongjiang Environmental and Shenzhen MYS
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongjiang and Shenzhen is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Dongjiang Environmental Co and Shenzhen MYS Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen MYS Environ 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 Shenzhen MYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen MYS Environ has no effect on the direction of Dongjiang Environmental i.e., Dongjiang Environmental and Shenzhen MYS go up and down completely randomly.
Pair Corralation between Dongjiang Environmental and Shenzhen MYS
Assuming the 90 days trading horizon Dongjiang Environmental Co is expected to under-perform the Shenzhen MYS. But the stock apears to be less risky and, when comparing its historical volatility, Dongjiang Environmental Co is 1.6 times less risky than Shenzhen MYS. The stock trades about -0.19 of its potential returns per unit of risk. The Shenzhen MYS Environmental is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 325.00 in Shenzhen MYS Environmental on August 28, 2024 and sell it today you would earn a total of 88.00 from holding Shenzhen MYS Environmental or generate 27.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongjiang Environmental Co vs. Shenzhen MYS Environmental
Performance |
| Timeline |
| Dongjiang Environmental |
| Shenzhen MYS Environ |
Dongjiang Environmental and Shenzhen MYS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongjiang Environmental and Shenzhen MYS
The main advantage of trading using opposite Dongjiang Environmental and Shenzhen MYS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongjiang Environmental position performs unexpectedly, Shenzhen MYS 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 Shenzhen MYS will offset losses from the drop in Shenzhen MYS's long position.The idea behind Dongjiang Environmental Co and Shenzhen MYS Environmental 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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