Correlation Between Dongfeng Automobile and Shenyang Chemical
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By analyzing existing cross correlation between Dongfeng Automobile Co and Shenyang Chemical Industry, you can compare the effects of market volatilities on Dongfeng Automobile and Shenyang Chemical 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 Dongfeng Automobile with a short position of Shenyang Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongfeng Automobile and Shenyang Chemical.
Diversification Opportunities for Dongfeng Automobile and Shenyang Chemical
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongfeng and Shenyang is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Dongfeng Automobile Co and Shenyang Chemical Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenyang Chemical and Dongfeng Automobile 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 Dongfeng Automobile Co are associated (or correlated) with Shenyang Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenyang Chemical has no effect on the direction of Dongfeng Automobile i.e., Dongfeng Automobile and Shenyang Chemical go up and down completely randomly.
Pair Corralation between Dongfeng Automobile and Shenyang Chemical
Assuming the 90 days trading horizon Dongfeng Automobile Co is expected to under-perform the Shenyang Chemical. But the stock apears to be less risky and, when comparing its historical volatility, Dongfeng Automobile Co is 1.05 times less risky than Shenyang Chemical. The stock trades about -0.22 of its potential returns per unit of risk. The Shenyang Chemical Industry is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest 388.00 in Shenyang Chemical Industry on October 17, 2024 and sell it today you would lose (60.00) from holding Shenyang Chemical Industry or give up 15.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongfeng Automobile Co vs. Shenyang Chemical Industry
Performance |
| Timeline |
| Dongfeng Automobile |
| Shenyang Chemical |
Dongfeng Automobile and Shenyang Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongfeng Automobile and Shenyang Chemical
The main advantage of trading using opposite Dongfeng Automobile and Shenyang Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongfeng Automobile position performs unexpectedly, Shenyang Chemical 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 Shenyang Chemical will offset losses from the drop in Shenyang Chemical's long position.| Dongfeng Automobile vs. Beijing Mainstreets Investment | Dongfeng Automobile vs. ButOne Information Corp | Dongfeng Automobile vs. Sublime China Information | Dongfeng Automobile vs. Shenzhen SDG Information |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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