Correlation Between Chin Yang and Dreamus
Can any of the company-specific risk be diversified away by investing in both Chin Yang and Dreamus at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Chin Yang and Dreamus into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chin Yang Chemical and Dreamus Company, you can compare the effects of market volatilities on Chin Yang and Dreamus 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 Chin Yang with a short position of Dreamus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chin Yang and Dreamus.
Diversification Opportunities for Chin Yang and Dreamus
Significant diversification
The 3 months correlation between Chin and Dreamus is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Chin Yang Chemical and Dreamus Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dreamus Company and Chin Yang 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 Chin Yang Chemical are associated (or correlated) with Dreamus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dreamus Company has no effect on the direction of Chin Yang i.e., Chin Yang and Dreamus go up and down completely randomly.
Pair Corralation between Chin Yang and Dreamus
Assuming the 90 days trading horizon Chin Yang Chemical is expected to generate 0.64 times more return on investment than Dreamus. However, Chin Yang Chemical is 1.56 times less risky than Dreamus. It trades about -0.02 of its potential returns per unit of risk. Dreamus Company is currently generating about -0.01 per unit of risk. If you would invest 359,811 in Chin Yang Chemical on August 25, 2024 and sell it today you would lose (95,311) from holding Chin Yang Chemical or give up 26.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chin Yang Chemical vs. Dreamus Company
Performance |
| Timeline |
| Chin Yang Chemical |
| Dreamus Company |
Chin Yang and Dreamus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chin Yang and Dreamus
The main advantage of trading using opposite Chin Yang and Dreamus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chin Yang position performs unexpectedly, Dreamus 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 Dreamus will offset losses from the drop in Dreamus' long position.| Chin Yang vs. AptaBio Therapeutics | Chin Yang vs. Daewoo SBI SPAC | Chin Yang vs. Dream Security co | Chin Yang vs. Microfriend |
| Dreamus vs. KG Eco Technology | Dreamus vs. Dong A Steel Technology | Dreamus vs. Chin Yang Chemical | Dreamus vs. Hana Technology 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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