Correlation Between China Metal and Data International
Can any of the company-specific risk be diversified away by investing in both China Metal and Data International 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 China Metal and Data International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Metal Products and Data International Co, you can compare the effects of market volatilities on China Metal and Data International 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 China Metal with a short position of Data International. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Metal and Data International.
Diversification Opportunities for China Metal and Data International
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and Data is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding China Metal Products and Data International Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data International and China Metal 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 China Metal Products are associated (or correlated) with Data International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data International has no effect on the direction of China Metal i.e., China Metal and Data International go up and down completely randomly.
Pair Corralation between China Metal and Data International
Assuming the 90 days trading horizon China Metal Products is expected to generate 0.2 times more return on investment than Data International. However, China Metal Products is 4.95 times less risky than Data International. It trades about -0.24 of its potential returns per unit of risk. Data International Co is currently generating about -0.1 per unit of risk. If you would invest 3,150 in China Metal Products on October 29, 2024 and sell it today you would lose (135.00) from holding China Metal Products or give up 4.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Metal Products vs. Data International Co
Performance |
| Timeline |
| China Metal Products |
| Data International |
China Metal and Data International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Metal and Data International
The main advantage of trading using opposite China Metal and Data International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Metal position performs unexpectedly, Data International 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 Data International will offset losses from the drop in Data International's long position.| China Metal vs. Basso Industry Corp | China Metal vs. Chung Hsin Electric Machinery | China Metal vs. TYC Brother Industrial | China Metal vs. TECO Electric Machinery |
| Data International vs. Tong Hwa Synthetic Fiber | Data International vs. Sea Sonic Electronics | Data International vs. Acelon Chemicals Fiber | Data International vs. Shinkong Synthetic Fiber |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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