Correlation Between Aba Chemicals and Dongfeng Automobile
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By analyzing existing cross correlation between Aba Chemicals Corp and Dongfeng Automobile Co, you can compare the effects of market volatilities on Aba Chemicals and Dongfeng Automobile 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 Dongfeng Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aba Chemicals and Dongfeng Automobile.
Diversification Opportunities for Aba Chemicals and Dongfeng Automobile
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aba and Dongfeng is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Aba Chemicals Corp and Dongfeng Automobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongfeng Automobile 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 Dongfeng Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongfeng Automobile has no effect on the direction of Aba Chemicals i.e., Aba Chemicals and Dongfeng Automobile go up and down completely randomly.
Pair Corralation between Aba Chemicals and Dongfeng Automobile
Assuming the 90 days trading horizon Aba Chemicals Corp is expected to under-perform the Dongfeng Automobile. But the stock apears to be less risky and, when comparing its historical volatility, Aba Chemicals Corp is 1.12 times less risky than Dongfeng Automobile. The stock trades about -0.17 of its potential returns per unit of risk. The Dongfeng Automobile Co is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 685.00 in Dongfeng Automobile Co on November 7, 2024 and sell it today you would lose (20.00) from holding Dongfeng Automobile Co or give up 2.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aba Chemicals Corp vs. Dongfeng Automobile Co
Performance |
| Timeline |
| Aba Chemicals Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Dongfeng Automobile |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Aba Chemicals and Dongfeng Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aba Chemicals and Dongfeng Automobile
The main advantage of trading using opposite Aba Chemicals and Dongfeng Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aba Chemicals position performs unexpectedly, Dongfeng Automobile 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 Dongfeng Automobile will offset losses from the drop in Dongfeng Automobile's long position.The idea behind Aba Chemicals Corp and Dongfeng Automobile Co 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.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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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