Correlation Between CN MODERN and DAIDO METAL
Can any of the company-specific risk be diversified away by investing in both CN MODERN and DAIDO METAL 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 CN MODERN and DAIDO METAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and DAIDO METAL TD, you can compare the effects of market volatilities on CN MODERN and DAIDO METAL 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 CN MODERN with a short position of DAIDO METAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and DAIDO METAL.
Diversification Opportunities for CN MODERN and DAIDO METAL
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between 07M and DAIDO is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and DAIDO METAL TD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIDO METAL TD and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with DAIDO METAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIDO METAL TD has no effect on the direction of CN MODERN i.e., CN MODERN and DAIDO METAL go up and down completely randomly.
Pair Corralation between CN MODERN and DAIDO METAL
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to generate 2.61 times more return on investment than DAIDO METAL. However, CN MODERN is 2.61 times more volatile than DAIDO METAL TD. It trades about 0.05 of its potential returns per unit of risk. DAIDO METAL TD is currently generating about 0.01 per unit of risk. If you would invest 10.00 in CN MODERN DAIRY on October 31, 2024 and sell it today you would earn a total of 1.00 from holding CN MODERN DAIRY or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. DAIDO METAL TD
Performance |
| Timeline |
| CN MODERN DAIRY |
| DAIDO METAL TD |
CN MODERN and DAIDO METAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and DAIDO METAL
The main advantage of trading using opposite CN MODERN and DAIDO METAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, DAIDO METAL 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 DAIDO METAL will offset losses from the drop in DAIDO METAL's long position.| CN MODERN vs. PKSHA TECHNOLOGY INC | CN MODERN vs. UNITED RENTALS | CN MODERN vs. Amkor Technology | CN MODERN vs. FUYO GENERAL LEASE |
| DAIDO METAL vs. Broadwind | DAIDO METAL vs. Citic Telecom International | DAIDO METAL vs. BII Railway Transportation | DAIDO METAL vs. China Communications Services |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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