Correlation Between Daxin Materials and EirGenix
Can any of the company-specific risk be diversified away by investing in both Daxin Materials and EirGenix 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 EirGenix 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 EirGenix, you can compare the effects of market volatilities on Daxin Materials and EirGenix 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 EirGenix. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daxin Materials and EirGenix.
Diversification Opportunities for Daxin Materials and EirGenix
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daxin and EirGenix is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Daxin Materials Corp and EirGenix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EirGenix 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 EirGenix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EirGenix has no effect on the direction of Daxin Materials i.e., Daxin Materials and EirGenix go up and down completely randomly.
Pair Corralation between Daxin Materials and EirGenix
Assuming the 90 days trading horizon Daxin Materials Corp is expected to generate 1.55 times more return on investment than EirGenix. However, Daxin Materials is 1.55 times more volatile than EirGenix. It trades about 0.28 of its potential returns per unit of risk. EirGenix is currently generating about 0.31 per unit of risk. If you would invest 19,500 in Daxin Materials Corp on November 3, 2024 and sell it today you would earn a total of 3,000 from holding Daxin Materials Corp or generate 15.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Daxin Materials Corp vs. EirGenix
Performance |
| Timeline |
| Daxin Materials Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| EirGenix |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Daxin Materials and EirGenix Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daxin Materials and EirGenix
The main advantage of trading using opposite Daxin Materials and EirGenix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daxin Materials position performs unexpectedly, EirGenix 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 EirGenix will offset losses from the drop in EirGenix's long position.The idea behind Daxin Materials Corp and EirGenix 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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