Correlation Between Baotek Industrial and Daxin Materials
Can any of the company-specific risk be diversified away by investing in both Baotek Industrial 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 Baotek Industrial and Daxin Materials into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Baotek Industrial Materials and Daxin Materials Corp, you can compare the effects of market volatilities on Baotek Industrial 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 Baotek Industrial with a short position of Daxin Materials. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baotek Industrial and Daxin Materials.
Diversification Opportunities for Baotek Industrial and Daxin Materials
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Baotek and Daxin is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Baotek Industrial Materials 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 Baotek Industrial 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 Baotek Industrial Materials 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 Baotek Industrial i.e., Baotek Industrial and Daxin Materials go up and down completely randomly.
Pair Corralation between Baotek Industrial and Daxin Materials
Assuming the 90 days trading horizon Baotek Industrial Materials is expected to generate 0.96 times more return on investment than Daxin Materials. However, Baotek Industrial Materials is 1.05 times less risky than Daxin Materials. It trades about 0.1 of its potential returns per unit of risk. Daxin Materials Corp is currently generating about 0.02 per unit of risk. If you would invest 4,230 in Baotek Industrial Materials on August 30, 2024 and sell it today you would earn a total of 255.00 from holding Baotek Industrial Materials or generate 6.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Baotek Industrial Materials vs. Daxin Materials Corp
Performance |
| Timeline |
| Baotek Industrial |
| Daxin Materials Corp |
Baotek Industrial and Daxin Materials Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Baotek Industrial and Daxin Materials
The main advantage of trading using opposite Baotek Industrial and Daxin Materials positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Baotek Industrial 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.| Baotek Industrial vs. Far Eastern New | Baotek Industrial vs. Eclat Textile Co | Baotek Industrial vs. Ruentex Industries | Baotek Industrial vs. Formosa Taffeta Co |
| Daxin Materials vs. Topco Scientific Co | Daxin Materials vs. Holtek Semiconductor | Daxin Materials vs. Greatek Electronics | Daxin Materials vs. Stark Technology |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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