Correlation Between Dongjiang Environmental and Eit Environmental
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By analyzing existing cross correlation between Dongjiang Environmental Co and Eit Environmental Development, you can compare the effects of market volatilities on Dongjiang Environmental and Eit Environmental 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 Eit Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongjiang Environmental and Eit Environmental.
Diversification Opportunities for Dongjiang Environmental and Eit Environmental
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dongjiang and Eit is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Dongjiang Environmental Co and Eit Environmental Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eit Environmental 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 Eit Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eit Environmental has no effect on the direction of Dongjiang Environmental i.e., Dongjiang Environmental and Eit Environmental go up and down completely randomly.
Pair Corralation between Dongjiang Environmental and Eit Environmental
Assuming the 90 days trading horizon Dongjiang Environmental Co is expected to generate 0.92 times more return on investment than Eit Environmental. However, Dongjiang Environmental Co is 1.08 times less risky than Eit Environmental. It trades about -0.03 of its potential returns per unit of risk. Eit Environmental Development is currently generating about -0.1 per unit of risk. If you would invest 507.00 in Dongjiang Environmental Co on September 13, 2024 and sell it today you would lose (10.00) from holding Dongjiang Environmental Co or give up 1.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dongjiang Environmental Co vs. Eit Environmental Development
Performance |
| Timeline |
| Dongjiang Environmental |
| Eit Environmental |
Dongjiang Environmental and Eit Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongjiang Environmental and Eit Environmental
The main advantage of trading using opposite Dongjiang Environmental and Eit Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongjiang Environmental position performs unexpectedly, Eit Environmental 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 Eit Environmental will offset losses from the drop in Eit Environmental's long position.The idea behind Dongjiang Environmental Co and Eit Environmental Development 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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