Correlation Between Dongnan Electronics and Kweichow Moutai
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By analyzing existing cross correlation between Dongnan Electronics Co and Kweichow Moutai Co, you can compare the effects of market volatilities on Dongnan Electronics and Kweichow Moutai 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 Kweichow Moutai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongnan Electronics and Kweichow Moutai.
Diversification Opportunities for Dongnan Electronics and Kweichow Moutai
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongnan and Kweichow is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Dongnan Electronics Co and Kweichow Moutai Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kweichow Moutai 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 Kweichow Moutai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kweichow Moutai has no effect on the direction of Dongnan Electronics i.e., Dongnan Electronics and Kweichow Moutai go up and down completely randomly.
Pair Corralation between Dongnan Electronics and Kweichow Moutai
Assuming the 90 days trading horizon Dongnan Electronics Co is expected to generate 3.68 times more return on investment than Kweichow Moutai. However, Dongnan Electronics is 3.68 times more volatile than Kweichow Moutai Co. It trades about 0.06 of its potential returns per unit of risk. Kweichow Moutai Co is currently generating about -0.02 per unit of risk. If you would invest 2,336 in Dongnan Electronics Co on August 30, 2024 and sell it today you would earn a total of 88.00 from holding Dongnan Electronics Co or generate 3.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongnan Electronics Co vs. Kweichow Moutai Co
Performance |
| Timeline |
| Dongnan Electronics |
| Kweichow Moutai |
Dongnan Electronics and Kweichow Moutai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongnan Electronics and Kweichow Moutai
The main advantage of trading using opposite Dongnan Electronics and Kweichow Moutai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongnan Electronics position performs unexpectedly, Kweichow Moutai 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 Kweichow Moutai will offset losses from the drop in Kweichow Moutai's long position.| Dongnan Electronics vs. PetroChina Co Ltd | Dongnan Electronics vs. China State Construction | Dongnan Electronics vs. China Mobile Limited | Dongnan Electronics vs. Industrial and Commercial |
| Kweichow Moutai vs. PetroChina Co Ltd | Kweichow Moutai vs. China Mobile Limited | Kweichow Moutai vs. Ping An Insurance | Kweichow Moutai vs. China Petroleum Chemical |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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