Correlation Between Dongfeng Automobile and Pengxin International
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By analyzing existing cross correlation between Dongfeng Automobile Co and Pengxin International Mining, you can compare the effects of market volatilities on Dongfeng Automobile and Pengxin International 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 Pengxin International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongfeng Automobile and Pengxin International.
Diversification Opportunities for Dongfeng Automobile and Pengxin International
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dongfeng and Pengxin is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Dongfeng Automobile Co and Pengxin International Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pengxin International 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 Pengxin International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pengxin International has no effect on the direction of Dongfeng Automobile i.e., Dongfeng Automobile and Pengxin International go up and down completely randomly.
Pair Corralation between Dongfeng Automobile and Pengxin International
Assuming the 90 days trading horizon Dongfeng Automobile Co is expected to under-perform the Pengxin International. But the stock apears to be less risky and, when comparing its historical volatility, Dongfeng Automobile Co is 1.12 times less risky than Pengxin International. The stock trades about -0.19 of its potential returns per unit of risk. The Pengxin International Mining is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 329.00 in Pengxin International Mining on November 3, 2024 and sell it today you would lose (14.00) from holding Pengxin International Mining or give up 4.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongfeng Automobile Co vs. Pengxin International Mining
Performance |
| Timeline |
| Dongfeng Automobile |
| Pengxin International |
Dongfeng Automobile and Pengxin International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongfeng Automobile and Pengxin International
The main advantage of trading using opposite Dongfeng Automobile and Pengxin International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongfeng Automobile position performs unexpectedly, Pengxin International 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 Pengxin International will offset losses from the drop in Pengxin International's long position.The idea behind Dongfeng Automobile Co and Pengxin International Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 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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