Correlation Between Shan Loong and Dadi Early
Can any of the company-specific risk be diversified away by investing in both Shan Loong 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 Shan Loong and Dadi Early 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 Dadi Early Childhood Education, you can compare the effects of market volatilities on Shan Loong 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 Shan Loong with a short position of Dadi Early. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shan Loong and Dadi Early.
Diversification Opportunities for Shan Loong and Dadi Early
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shan and Dadi is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Shan Loong Transportation Co 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 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 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 Shan Loong i.e., Shan Loong and Dadi Early go up and down completely randomly.
Pair Corralation between Shan Loong and Dadi Early
Assuming the 90 days trading horizon Shan Loong Transportation Co is expected to under-perform the Dadi Early. But the stock apears to be less risky and, when comparing its historical volatility, Shan Loong Transportation Co is 1.73 times less risky than Dadi Early. The stock trades about -0.18 of its potential returns per unit of risk. The Dadi Early Childhood Education is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 2,980 in Dadi Early Childhood Education on October 26, 2024 and sell it today you would lose (225.00) from holding Dadi Early Childhood Education or give up 7.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shan Loong Transportation Co vs. Dadi Early Childhood Education
Performance |
| Timeline |
| Shan Loong Transport |
| Dadi Early Childhood |
Shan Loong and Dadi Early Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shan Loong and Dadi Early
The main advantage of trading using opposite Shan Loong and Dadi Early positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shan Loong 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.| Shan Loong vs. Kerry TJ Logistics | Shan Loong vs. China Container Terminal | Shan Loong vs. Eastern Media International | Shan Loong vs. Taiwan Navigation Co |
| Dadi Early vs. Standard Chemical Pharmaceutical | Dadi Early vs. Powertech Industrial Co | Dadi Early vs. Allied Industrial | Dadi Early vs. Jentech Precision Industrial |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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