Correlation Between CHINA DEVELOPMENT and Dadi Early
Can any of the company-specific risk be diversified away by investing in both CHINA DEVELOPMENT 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 DEVELOPMENT 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 DEVELOPMENT FINANCIAL and Dadi Early Childhood Education, you can compare the effects of market volatilities on CHINA DEVELOPMENT 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 DEVELOPMENT with a short position of Dadi Early. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA DEVELOPMENT and Dadi Early.
Diversification Opportunities for CHINA DEVELOPMENT and Dadi Early
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CHINA and Dadi is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding CHINA DEVELOPMENT FINANCIAL 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 DEVELOPMENT 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 DEVELOPMENT FINANCIAL 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 DEVELOPMENT i.e., CHINA DEVELOPMENT and Dadi Early go up and down completely randomly.
Pair Corralation between CHINA DEVELOPMENT and Dadi Early
Assuming the 90 days trading horizon CHINA DEVELOPMENT FINANCIAL is expected to generate 0.18 times more return on investment than Dadi Early. However, CHINA DEVELOPMENT FINANCIAL is 5.57 times less risky than Dadi Early. It trades about 0.15 of its potential returns per unit of risk. Dadi Early Childhood Education is currently generating about -0.07 per unit of risk. If you would invest 655.00 in CHINA DEVELOPMENT FINANCIAL on September 14, 2024 and sell it today you would earn a total of 127.00 from holding CHINA DEVELOPMENT FINANCIAL or generate 19.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA DEVELOPMENT FINANCIAL vs. Dadi Early Childhood Education
Performance |
| Timeline |
| CHINA DEVELOPMENT |
| Dadi Early Childhood |
CHINA DEVELOPMENT and Dadi Early Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA DEVELOPMENT and Dadi Early
The main advantage of trading using opposite CHINA DEVELOPMENT and Dadi Early positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA DEVELOPMENT 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 DEVELOPMENT vs. Dadi Early Childhood Education | CHINA DEVELOPMENT vs. I Jang Industrial | CHINA DEVELOPMENT vs. Wha Yu Industrial | CHINA DEVELOPMENT vs. ALFORMER Industrial Co |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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