Correlation Between Dongnan Electronics and Kailong High
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By analyzing existing cross correlation between Dongnan Electronics Co and Kailong High Technology, you can compare the effects of market volatilities on Dongnan Electronics and Kailong High 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 Dongnan Electronics with a short position of Kailong High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongnan Electronics and Kailong High.
Diversification Opportunities for Dongnan Electronics and Kailong High
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dongnan and Kailong is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Dongnan Electronics Co and Kailong High Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kailong High Technology and Dongnan Electronics 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 Dongnan Electronics Co are associated (or correlated) with Kailong High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kailong High Technology has no effect on the direction of Dongnan Electronics i.e., Dongnan Electronics and Kailong High go up and down completely randomly.
Pair Corralation between Dongnan Electronics and Kailong High
Assuming the 90 days trading horizon Dongnan Electronics is expected to generate 1.33 times less return on investment than Kailong High. But when comparing it to its historical volatility, Dongnan Electronics Co is 1.49 times less risky than Kailong High. It trades about 0.36 of its potential returns per unit of risk. Kailong High Technology is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 1,040 in Kailong High Technology on November 7, 2024 and sell it today you would earn a total of 208.00 from holding Kailong High Technology or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongnan Electronics Co vs. Kailong High Technology
Performance |
| Timeline |
| Dongnan Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Kailong High Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Dongnan Electronics and Kailong High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongnan Electronics and Kailong High
The main advantage of trading using opposite Dongnan Electronics and Kailong High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongnan Electronics position performs unexpectedly, Kailong High 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 Kailong High will offset losses from the drop in Kailong High's long position.The idea behind Dongnan Electronics Co and Kailong High Technology 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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