Correlation Between United Radiant and Daxin Materials
Can any of the company-specific risk be diversified away by investing in both United Radiant and Daxin Materials 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 United Radiant and Daxin Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Radiant Technology and Daxin Materials Corp, you can compare the effects of market volatilities on United Radiant and Daxin Materials 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 United Radiant with a short position of Daxin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Radiant and Daxin Materials.
Diversification Opportunities for United Radiant and Daxin Materials
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and Daxin is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding United Radiant Technology and Daxin Materials Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daxin Materials Corp and United Radiant 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 United Radiant Technology are associated (or correlated) with Daxin Materials. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daxin Materials Corp has no effect on the direction of United Radiant i.e., United Radiant and Daxin Materials go up and down completely randomly.
Pair Corralation between United Radiant and Daxin Materials
Assuming the 90 days trading horizon United Radiant is expected to generate 3.2 times less return on investment than Daxin Materials. But when comparing it to its historical volatility, United Radiant Technology is 1.68 times less risky than Daxin Materials. It trades about 0.03 of its potential returns per unit of risk. Daxin Materials Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 15,800 in Daxin Materials Corp on October 13, 2024 and sell it today you would earn a total of 3,550 from holding Daxin Materials Corp or generate 22.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United Radiant Technology vs. Daxin Materials Corp
Performance |
| Timeline |
| United Radiant Technology |
| Daxin Materials Corp |
United Radiant and Daxin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Radiant and Daxin Materials
The main advantage of trading using opposite United Radiant and Daxin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Radiant position performs unexpectedly, Daxin Materials 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 Daxin Materials will offset losses from the drop in Daxin Materials' long position.| United Radiant vs. Hung Sheng Construction | United Radiant vs. Sun Sea Construction | United Radiant vs. Pacific Construction Co | United Radiant vs. Sporton International |
| Daxin Materials vs. Basso Industry Corp | Daxin Materials vs. Chung Hsin Electric Machinery | Daxin Materials vs. TECO Electric Machinery |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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