Correlation Between Dongguan Aohai and Tengda Construction
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By analyzing existing cross correlation between Dongguan Aohai Technology and Tengda Construction Group, you can compare the effects of market volatilities on Dongguan Aohai and Tengda Construction 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 Dongguan Aohai with a short position of Tengda Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongguan Aohai and Tengda Construction.
Diversification Opportunities for Dongguan Aohai and Tengda Construction
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongguan and Tengda is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Dongguan Aohai Technology and Tengda Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tengda Construction and Dongguan Aohai 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 Dongguan Aohai Technology are associated (or correlated) with Tengda Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tengda Construction has no effect on the direction of Dongguan Aohai i.e., Dongguan Aohai and Tengda Construction go up and down completely randomly.
Pair Corralation between Dongguan Aohai and Tengda Construction
Assuming the 90 days trading horizon Dongguan Aohai Technology is expected to generate 1.67 times more return on investment than Tengda Construction. However, Dongguan Aohai is 1.67 times more volatile than Tengda Construction Group. It trades about 0.02 of its potential returns per unit of risk. Tengda Construction Group is currently generating about -0.01 per unit of risk. If you would invest 3,457 in Dongguan Aohai Technology on October 9, 2024 and sell it today you would earn a total of 238.00 from holding Dongguan Aohai Technology or generate 6.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongguan Aohai Technology vs. Tengda Construction Group
Performance |
| Timeline |
| Dongguan Aohai Technology |
| Tengda Construction |
Dongguan Aohai and Tengda Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongguan Aohai and Tengda Construction
The main advantage of trading using opposite Dongguan Aohai and Tengda Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongguan Aohai position performs unexpectedly, Tengda Construction 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 Tengda Construction will offset losses from the drop in Tengda Construction's long position.| Dongguan Aohai vs. China Petroleum Chemical | Dongguan Aohai vs. PetroChina Co Ltd | Dongguan Aohai vs. China State Construction | Dongguan Aohai vs. China Railway Group |
| Tengda Construction vs. Agricultural Bank of | Tengda Construction vs. Industrial and Commercial | Tengda Construction vs. Bank of China | Tengda Construction vs. PetroChina Co Ltd |
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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