Correlation Between Aba Chemicals and Digital China
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By analyzing existing cross correlation between Aba Chemicals Corp and Digital China Information, you can compare the effects of market volatilities on Aba Chemicals and Digital China 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 Aba Chemicals with a short position of Digital China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aba Chemicals and Digital China.
Diversification Opportunities for Aba Chemicals and Digital China
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Aba and Digital is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Aba Chemicals Corp and Digital China Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital China Information and Aba Chemicals 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 Aba Chemicals Corp are associated (or correlated) with Digital China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital China Information has no effect on the direction of Aba Chemicals i.e., Aba Chemicals and Digital China go up and down completely randomly.
Pair Corralation between Aba Chemicals and Digital China
Assuming the 90 days trading horizon Aba Chemicals Corp is expected to under-perform the Digital China. But the stock apears to be less risky and, when comparing its historical volatility, Aba Chemicals Corp is 1.21 times less risky than Digital China. The stock trades about -0.17 of its potential returns per unit of risk. The Digital China Information is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,297 in Digital China Information on September 13, 2024 and sell it today you would earn a total of 67.00 from holding Digital China Information or generate 5.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aba Chemicals Corp vs. Digital China Information
Performance |
| Timeline |
| Aba Chemicals Corp |
| Digital China Information |
Aba Chemicals and Digital China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aba Chemicals and Digital China
The main advantage of trading using opposite Aba Chemicals and Digital China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aba Chemicals position performs unexpectedly, Digital China 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 Digital China will offset losses from the drop in Digital China's long position.| Aba Chemicals vs. Changchun Faway Automobile | Aba Chemicals vs. Zhongyin Babi Food | Aba Chemicals vs. Jiangsu Financial Leasing | Aba Chemicals vs. Xiangyang Automobile Bearing |
| Digital China vs. China Petroleum Chemical | Digital China vs. PetroChina Co Ltd | Digital China vs. China State Construction | Digital China vs. China Railway Group |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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