Correlation Between Shandong Intco and Digital China
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By analyzing existing cross correlation between Shandong Intco Medical and Digital China Information, you can compare the effects of market volatilities on Shandong Intco 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 Shandong Intco with a short position of Digital China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shandong Intco and Digital China.
Diversification Opportunities for Shandong Intco and Digital China
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shandong and Digital is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Shandong Intco Medical 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 Shandong Intco 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 Shandong Intco Medical 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 Shandong Intco i.e., Shandong Intco and Digital China go up and down completely randomly.
Pair Corralation between Shandong Intco and Digital China
Assuming the 90 days trading horizon Shandong Intco Medical is expected to generate 0.8 times more return on investment than Digital China. However, Shandong Intco Medical is 1.26 times less risky than Digital China. It trades about 0.13 of its potential returns per unit of risk. Digital China Information is currently generating about -0.13 per unit of risk. If you would invest 2,590 in Shandong Intco Medical on October 28, 2024 and sell it today you would earn a total of 147.00 from holding Shandong Intco Medical or generate 5.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shandong Intco Medical vs. Digital China Information
Performance |
| Timeline |
| Shandong Intco Medical |
| Digital China Information |
Shandong Intco and Digital China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shandong Intco and Digital China
The main advantage of trading using opposite Shandong Intco and Digital China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shandong Intco 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.| Shandong Intco vs. Agricultural Bank of | Shandong Intco vs. Industrial and Commercial | Shandong Intco vs. Bank of China | Shandong Intco vs. China Construction Bank |
| Digital China vs. Shanghai Construction Group | Digital China vs. Zhejiang Construction Investment | Digital China vs. Tjk Machinery Tianjin | Digital China vs. Sportsoul Co Ltd |
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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