Correlation Between Daxin Materials and Chernan Metal
Can any of the company-specific risk be diversified away by investing in both Daxin Materials and Chernan Metal 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 Daxin Materials and Chernan Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Daxin Materials Corp and Chernan Metal Industrial, you can compare the effects of market volatilities on Daxin Materials and Chernan Metal 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 Daxin Materials with a short position of Chernan Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daxin Materials and Chernan Metal.
Diversification Opportunities for Daxin Materials and Chernan Metal
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Daxin and Chernan is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Daxin Materials Corp and Chernan Metal Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chernan Metal Industrial and Daxin Materials 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 Daxin Materials Corp are associated (or correlated) with Chernan Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chernan Metal Industrial has no effect on the direction of Daxin Materials i.e., Daxin Materials and Chernan Metal go up and down completely randomly.
Pair Corralation between Daxin Materials and Chernan Metal
Assuming the 90 days trading horizon Daxin Materials Corp is expected to generate 2.15 times more return on investment than Chernan Metal. However, Daxin Materials is 2.15 times more volatile than Chernan Metal Industrial. It trades about 0.05 of its potential returns per unit of risk. Chernan Metal Industrial is currently generating about -0.08 per unit of risk. If you would invest 18,700 in Daxin Materials Corp on September 12, 2024 and sell it today you would earn a total of 1,650 from holding Daxin Materials Corp or generate 8.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daxin Materials Corp vs. Chernan Metal Industrial
Performance |
| Timeline |
| Daxin Materials Corp |
| Chernan Metal Industrial |
Daxin Materials and Chernan Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daxin Materials and Chernan Metal
The main advantage of trading using opposite Daxin Materials and Chernan Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daxin Materials position performs unexpectedly, Chernan Metal 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 Chernan Metal will offset losses from the drop in Chernan Metal's long position.| Daxin Materials vs. Tainan Spinning Co | Daxin Materials vs. Lealea Enterprise Co | Daxin Materials vs. China Petrochemical Development | Daxin Materials vs. Ruentex Development Co |
| Chernan Metal vs. Catcher Technology Co | Chernan Metal vs. Solar Applied Materials | Chernan Metal vs. Evergreen Steel Corp | Chernan Metal vs. Shin Zu Shing |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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