Correlation Between Double Bond and M3 Technology
Can any of the company-specific risk be diversified away by investing in both Double Bond and M3 Technology at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Double Bond and M3 Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Double Bond Chemical and M3 Technology, you can compare the effects of market volatilities on Double Bond and M3 Technology 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 Double Bond with a short position of M3 Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Double Bond and M3 Technology.
Diversification Opportunities for Double Bond and M3 Technology
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Double and 6799 is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Double Bond Chemical and M3 Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on M3 Technology and Double Bond 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 Double Bond Chemical are associated (or correlated) with M3 Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of M3 Technology has no effect on the direction of Double Bond i.e., Double Bond and M3 Technology go up and down completely randomly.
Pair Corralation between Double Bond and M3 Technology
Assuming the 90 days trading horizon Double Bond Chemical is expected to under-perform the M3 Technology. But the stock apears to be less risky and, when comparing its historical volatility, Double Bond Chemical is 1.97 times less risky than M3 Technology. The stock trades about -0.21 of its potential returns per unit of risk. The M3 Technology is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 10,450 in M3 Technology on September 4, 2024 and sell it today you would lose (540.00) from holding M3 Technology or give up 5.17% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Double Bond Chemical vs. M3 Technology
Performance |
| Timeline |
| Double Bond Chemical |
| M3 Technology |
Double Bond and M3 Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Double Bond and M3 Technology
The main advantage of trading using opposite Double Bond and M3 Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Double Bond position performs unexpectedly, M3 Technology 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 M3 Technology will offset losses from the drop in M3 Technology's long position.| Double Bond vs. Delta Electronics | Double Bond vs. China Steel Chemical | Double Bond vs. WiseChip Semiconductor | Double Bond vs. Novatek Microelectronics Corp |
| M3 Technology vs. Shinkong Synthetic Fiber | M3 Technology vs. Jinan Acetate Chemical | M3 Technology vs. Mercuries Data Systems | M3 Technology vs. Double Bond 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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