Correlation Between Sesoda Corp and Dawushan Farm
Can any of the company-specific risk be diversified away by investing in both Sesoda Corp and Dawushan Farm 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 Sesoda Corp and Dawushan Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sesoda Corp and Dawushan Farm Tech, you can compare the effects of market volatilities on Sesoda Corp and Dawushan Farm 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 Sesoda Corp with a short position of Dawushan Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sesoda Corp and Dawushan Farm.
Diversification Opportunities for Sesoda Corp and Dawushan Farm
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Sesoda and Dawushan is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Sesoda Corp and Dawushan Farm Tech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dawushan Farm Tech and Sesoda Corp 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 Sesoda Corp are associated (or correlated) with Dawushan Farm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dawushan Farm Tech has no effect on the direction of Sesoda Corp i.e., Sesoda Corp and Dawushan Farm go up and down completely randomly.
Pair Corralation between Sesoda Corp and Dawushan Farm
Assuming the 90 days trading horizon Sesoda Corp is expected to generate 1.33 times more return on investment than Dawushan Farm. However, Sesoda Corp is 1.33 times more volatile than Dawushan Farm Tech. It trades about 0.04 of its potential returns per unit of risk. Dawushan Farm Tech is currently generating about -0.05 per unit of risk. If you would invest 3,480 in Sesoda Corp on October 26, 2024 and sell it today you would earn a total of 255.00 from holding Sesoda Corp or generate 7.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sesoda Corp vs. Dawushan Farm Tech
Performance |
| Timeline |
| Sesoda Corp |
| Dawushan Farm Tech |
Sesoda Corp and Dawushan Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sesoda Corp and Dawushan Farm
The main advantage of trading using opposite Sesoda Corp and Dawushan Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sesoda Corp position performs unexpectedly, Dawushan Farm 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 Dawushan Farm will offset losses from the drop in Dawushan Farm's long position.| Sesoda Corp vs. Taiwan Fertilizer Co | Sesoda Corp vs. Sinon Corp | Sesoda Corp vs. Eternal Materials Co | Sesoda Corp vs. Oriental Union Chemical |
| Dawushan Farm vs. Shinkong Insurance Co | Dawushan Farm vs. Yuan High Tech Development | Dawushan Farm vs. Sesoda Corp | Dawushan Farm vs. Sun Max Tech |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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