Correlation Between CN MODERN and DONGJIANG ENVIRONMENTAL
Can any of the company-specific risk be diversified away by investing in both CN MODERN and DONGJIANG ENVIRONMENTAL 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 DONGJIANG ENVIRONMENTAL 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 DONGJIANG ENVIRONMENTAL H, you can compare the effects of market volatilities on CN MODERN and DONGJIANG 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 CN MODERN with a short position of DONGJIANG ENVIRONMENTAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and DONGJIANG ENVIRONMENTAL.
Diversification Opportunities for CN MODERN and DONGJIANG ENVIRONMENTAL
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between 07M and DONGJIANG is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and DONGJIANG ENVIRONMENTAL H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DONGJIANG ENVIRONMENTAL 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 DONGJIANG ENVIRONMENTAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DONGJIANG ENVIRONMENTAL has no effect on the direction of CN MODERN i.e., CN MODERN and DONGJIANG ENVIRONMENTAL go up and down completely randomly.
Pair Corralation between CN MODERN and DONGJIANG ENVIRONMENTAL
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to generate 2.14 times more return on investment than DONGJIANG ENVIRONMENTAL. However, CN MODERN is 2.14 times more volatile than DONGJIANG ENVIRONMENTAL H. It trades about 0.04 of its potential returns per unit of risk. DONGJIANG ENVIRONMENTAL H is currently generating about -0.39 per unit of risk. If you would invest 9.75 in CN MODERN DAIRY on October 11, 2024 and sell it today you would earn a total of 0.15 from holding CN MODERN DAIRY or generate 1.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
CN MODERN DAIRY vs. DONGJIANG ENVIRONMENTAL H
Performance |
| Timeline |
| CN MODERN DAIRY |
| DONGJIANG ENVIRONMENTAL |
CN MODERN and DONGJIANG ENVIRONMENTAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and DONGJIANG ENVIRONMENTAL
The main advantage of trading using opposite CN MODERN and DONGJIANG ENVIRONMENTAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, DONGJIANG 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 DONGJIANG ENVIRONMENTAL will offset losses from the drop in DONGJIANG ENVIRONMENTAL's long position.| CN MODERN vs. CITY OFFICE REIT | CN MODERN vs. ANTA SPORTS PRODUCT | CN MODERN vs. SPORT LISBOA E | CN MODERN vs. SOEDER SPORTFISKE AB |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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