Correlation Between Dongfeng Automobile and Western Metal
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By analyzing existing cross correlation between Dongfeng Automobile Co and Western Metal Materials, you can compare the effects of market volatilities on Dongfeng Automobile and Western Metal 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 Western Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongfeng Automobile and Western Metal.
Diversification Opportunities for Dongfeng Automobile and Western Metal
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dongfeng and Western is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dongfeng Automobile Co and Western Metal Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Metal Materials 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 Western Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Metal Materials has no effect on the direction of Dongfeng Automobile i.e., Dongfeng Automobile and Western Metal go up and down completely randomly.
Pair Corralation between Dongfeng Automobile and Western Metal
Assuming the 90 days trading horizon Dongfeng Automobile is expected to generate 4.61 times less return on investment than Western Metal. In addition to that, Dongfeng Automobile is 1.11 times more volatile than Western Metal Materials. It trades about 0.02 of its total potential returns per unit of risk. Western Metal Materials is currently generating about 0.11 per unit of volatility. If you would invest 1,284 in Western Metal Materials on October 18, 2024 and sell it today you would earn a total of 544.00 from holding Western Metal Materials or generate 42.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongfeng Automobile Co vs. Western Metal Materials
Performance |
| Timeline |
| Dongfeng Automobile |
| Western Metal Materials |
Dongfeng Automobile and Western Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongfeng Automobile and Western Metal
The main advantage of trading using opposite Dongfeng Automobile and Western Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongfeng Automobile position performs unexpectedly, Western Metal 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 Western Metal will offset losses from the drop in Western Metal's long position.| Dongfeng Automobile vs. Changjiang Jinggong Steel | Dongfeng Automobile vs. Industrial Bank Co | Dongfeng Automobile vs. Xiamen Bank Co | Dongfeng Automobile vs. Baoshan Iron Steel |
| Western Metal vs. Union Semiconductor Co | Western Metal vs. Shanghai V Test Semiconductor | Western Metal vs. China Mobile Limited | Western Metal vs. Dongfeng Automobile Co |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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