Correlation Between Shan Loong and Dawushan Farm
Can any of the company-specific risk be diversified away by investing in both Shan Loong 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 Shan Loong and Dawushan Farm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shan Loong Transportation Co and Dawushan Farm Tech, you can compare the effects of market volatilities on Shan Loong 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 Shan Loong with a short position of Dawushan Farm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shan Loong and Dawushan Farm.
Diversification Opportunities for Shan Loong and Dawushan Farm
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shan and Dawushan is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Shan Loong Transportation Co 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 Shan Loong 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 Shan Loong Transportation Co 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 Shan Loong i.e., Shan Loong and Dawushan Farm go up and down completely randomly.
Pair Corralation between Shan Loong and Dawushan Farm
Assuming the 90 days trading horizon Shan Loong Transportation Co is expected to under-perform the Dawushan Farm. But the stock apears to be less risky and, when comparing its historical volatility, Shan Loong Transportation Co is 2.81 times less risky than Dawushan Farm. The stock trades about -0.05 of its potential returns per unit of risk. The Dawushan Farm Tech is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,650 in Dawushan Farm Tech on August 30, 2024 and sell it today you would earn a total of 140.00 from holding Dawushan Farm Tech or generate 3.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shan Loong Transportation Co vs. Dawushan Farm Tech
Performance |
| Timeline |
| Shan Loong Transport |
| Dawushan Farm Tech |
Shan Loong and Dawushan Farm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shan Loong and Dawushan Farm
The main advantage of trading using opposite Shan Loong and Dawushan Farm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shan Loong 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.The idea behind Shan Loong Transportation Co and Dawushan Farm Tech pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Dawushan Farm vs. Taiwan Chinsan Electronic | Dawushan Farm vs. Shan Loong Transportation Co | Dawushan Farm vs. Bright Led Electronics | Dawushan Farm vs. Voltronic Power Technology |
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.
Other Complementary Tools
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |