Correlation Between Daxin Materials and Lifestyle Global
Can any of the company-specific risk be diversified away by investing in both Daxin Materials and Lifestyle Global 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 Lifestyle Global 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 Lifestyle Global Enterprise, you can compare the effects of market volatilities on Daxin Materials and Lifestyle Global 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 Lifestyle Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Daxin Materials and Lifestyle Global.
Diversification Opportunities for Daxin Materials and Lifestyle Global
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Daxin and Lifestyle is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Daxin Materials Corp and Lifestyle Global Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifestyle Global Ent 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 Lifestyle Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifestyle Global Ent has no effect on the direction of Daxin Materials i.e., Daxin Materials and Lifestyle Global go up and down completely randomly.
Pair Corralation between Daxin Materials and Lifestyle Global
Assuming the 90 days trading horizon Daxin Materials Corp is expected to generate 3.83 times more return on investment than Lifestyle Global. However, Daxin Materials is 3.83 times more volatile than Lifestyle Global Enterprise. It trades about -0.07 of its potential returns per unit of risk. Lifestyle Global Enterprise is currently generating about -0.43 per unit of risk. If you would invest 20,450 in Daxin Materials Corp on October 13, 2024 and sell it today you would lose (1,100) from holding Daxin Materials Corp or give up 5.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Daxin Materials Corp vs. Lifestyle Global Enterprise
Performance |
| Timeline |
| Daxin Materials Corp |
| Lifestyle Global Ent |
Daxin Materials and Lifestyle Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Daxin Materials and Lifestyle Global
The main advantage of trading using opposite Daxin Materials and Lifestyle Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Daxin Materials position performs unexpectedly, Lifestyle Global 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 Lifestyle Global will offset losses from the drop in Lifestyle Global's long position.| Daxin Materials vs. Basso Industry Corp | Daxin Materials vs. Chung Hsin Electric Machinery | Daxin Materials vs. TECO Electric Machinery |
| Lifestyle Global vs. United Radiant Technology | Lifestyle Global vs. Yuan High Tech Development | Lifestyle Global vs. Central Reinsurance Corp | Lifestyle Global vs. Daxin Materials Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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