Correlation Between China Metal and Dadi Early
Can any of the company-specific risk be diversified away by investing in both China Metal and Dadi Early 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 Dadi Early 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 Dadi Early Childhood Education, you can compare the effects of market volatilities on China Metal and Dadi Early 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 Dadi Early. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Metal and Dadi Early.
Diversification Opportunities for China Metal and Dadi Early
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Dadi is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding China Metal Products and Dadi Early Childhood Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dadi Early Childhood 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 Dadi Early. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dadi Early Childhood has no effect on the direction of China Metal i.e., China Metal and Dadi Early go up and down completely randomly.
Pair Corralation between China Metal and Dadi Early
Assuming the 90 days trading horizon China Metal Products is expected to under-perform the Dadi Early. But the stock apears to be less risky and, when comparing its historical volatility, China Metal Products is 2.94 times less risky than Dadi Early. The stock trades about -0.46 of its potential returns per unit of risk. The Dadi Early Childhood Education is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest 2,800 in Dadi Early Childhood Education on October 12, 2024 and sell it today you would lose (160.00) from holding Dadi Early Childhood Education or give up 5.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Metal Products vs. Dadi Early Childhood Education
Performance |
| Timeline |
| China Metal Products |
| Dadi Early Childhood |
China Metal and Dadi Early Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Metal and Dadi Early
The main advantage of trading using opposite China Metal and Dadi Early positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Metal position performs unexpectedly, Dadi Early 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 Dadi Early will offset losses from the drop in Dadi Early'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 |
| Dadi Early vs. Asmedia Technology | Dadi Early vs. China Metal Products | Dadi Early vs. Chernan Metal Industrial | Dadi Early vs. Golden Biotechnology |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
Other Complementary Tools
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios |