Correlation Between De Licacy and Great Wall
Can any of the company-specific risk be diversified away by investing in both De Licacy and Great Wall 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 De Licacy and Great Wall into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between De Licacy Industrial and Great Wall Enterprise, you can compare the effects of market volatilities on De Licacy and Great Wall 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 De Licacy with a short position of Great Wall. Check out your portfolio center. Please also check ongoing floating volatility patterns of De Licacy and Great Wall.
Diversification Opportunities for De Licacy and Great Wall
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between 1464 and Great is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding De Licacy Industrial and Great Wall Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great Wall Enterprise and De Licacy 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 De Licacy Industrial are associated (or correlated) with Great Wall. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great Wall Enterprise has no effect on the direction of De Licacy i.e., De Licacy and Great Wall go up and down completely randomly.
Pair Corralation between De Licacy and Great Wall
Assuming the 90 days trading horizon De Licacy Industrial is expected to generate 1.98 times more return on investment than Great Wall. However, De Licacy is 1.98 times more volatile than Great Wall Enterprise. It trades about 0.06 of its potential returns per unit of risk. Great Wall Enterprise is currently generating about -0.05 per unit of risk. If you would invest 1,310 in De Licacy Industrial on September 3, 2024 and sell it today you would earn a total of 245.00 from holding De Licacy Industrial or generate 18.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
De Licacy Industrial vs. Great Wall Enterprise
Performance |
| Timeline |
| De Licacy Industrial |
| Great Wall Enterprise |
De Licacy and Great Wall Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with De Licacy and Great Wall
The main advantage of trading using opposite De Licacy and Great Wall positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if De Licacy position performs unexpectedly, Great Wall 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 Great Wall will offset losses from the drop in Great Wall's long position.| De Licacy vs. Tainan Spinning Co | De Licacy vs. Chia Her Industrial | De Licacy vs. WiseChip Semiconductor | De Licacy vs. Novatek Microelectronics Corp |
| Great Wall vs. Charoen Pokphand Enterprise | Great Wall vs. Uni President Enterprises Corp | Great Wall vs. Lien Hwa Industrial | Great Wall vs. Standard Foods Corp |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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