Correlation Between Weihai Honglin and Dongnan Electronics
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By analyzing existing cross correlation between Weihai Honglin Electronic and Dongnan Electronics Co, you can compare the effects of market volatilities on Weihai Honglin and Dongnan Electronics 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 Weihai Honglin with a short position of Dongnan Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Weihai Honglin and Dongnan Electronics.
Diversification Opportunities for Weihai Honglin and Dongnan Electronics
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Weihai and Dongnan is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Weihai Honglin Electronic and Dongnan Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnan Electronics and Weihai Honglin 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 Weihai Honglin Electronic are associated (or correlated) with Dongnan Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnan Electronics has no effect on the direction of Weihai Honglin i.e., Weihai Honglin and Dongnan Electronics go up and down completely randomly.
Pair Corralation between Weihai Honglin and Dongnan Electronics
Assuming the 90 days trading horizon Weihai Honglin is expected to generate 1.43 times less return on investment than Dongnan Electronics. In addition to that, Weihai Honglin is 1.86 times more volatile than Dongnan Electronics Co. It trades about 0.12 of its total potential returns per unit of risk. Dongnan Electronics Co is currently generating about 0.33 per unit of volatility. If you would invest 2,026 in Dongnan Electronics Co on November 7, 2024 and sell it today you would earn a total of 272.00 from holding Dongnan Electronics Co or generate 13.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Weihai Honglin Electronic vs. Dongnan Electronics Co
Performance |
| Timeline |
| Weihai Honglin Electronic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Dongnan Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Weihai Honglin and Dongnan Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Weihai Honglin and Dongnan Electronics
The main advantage of trading using opposite Weihai Honglin and Dongnan Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Weihai Honglin position performs unexpectedly, Dongnan Electronics 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 Dongnan Electronics will offset losses from the drop in Dongnan Electronics' long position.The idea behind Weihai Honglin Electronic and Dongnan Electronics 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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