Correlation Between Dongyang and MetaLabs
Can any of the company-specific risk be diversified away by investing in both Dongyang and MetaLabs 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 Dongyang and MetaLabs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dongyang EP and MetaLabs Co, you can compare the effects of market volatilities on Dongyang and MetaLabs 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 Dongyang with a short position of MetaLabs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongyang and MetaLabs.
Diversification Opportunities for Dongyang and MetaLabs
Very weak diversification
The 3 months correlation between Dongyang and MetaLabs is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Dongyang EP and MetaLabs Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetaLabs and Dongyang 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 Dongyang EP are associated (or correlated) with MetaLabs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetaLabs has no effect on the direction of Dongyang i.e., Dongyang and MetaLabs go up and down completely randomly.
Pair Corralation between Dongyang and MetaLabs
Assuming the 90 days trading horizon Dongyang EP is expected to generate 0.6 times more return on investment than MetaLabs. However, Dongyang EP is 1.68 times less risky than MetaLabs. It trades about 0.03 of its potential returns per unit of risk. MetaLabs Co is currently generating about -0.04 per unit of risk. If you would invest 1,428,003 in Dongyang EP on October 7, 2024 and sell it today you would earn a total of 364,997 from holding Dongyang EP or generate 25.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongyang EP vs. MetaLabs Co
Performance |
| Timeline |
| Dongyang EP |
| MetaLabs |
Dongyang and MetaLabs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongyang and MetaLabs
The main advantage of trading using opposite Dongyang and MetaLabs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongyang position performs unexpectedly, MetaLabs 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 MetaLabs will offset losses from the drop in MetaLabs' long position.| Dongyang vs. Jeil Steel Mfg | Dongyang vs. Sewoon Medical Co | Dongyang vs. Hankook Steel Co | Dongyang vs. Moonbae Steel |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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