Correlation Between Dongfeng Automobile and Hainan Haiqi
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By analyzing existing cross correlation between Dongfeng Automobile Co and Hainan Haiqi Transportation, you can compare the effects of market volatilities on Dongfeng Automobile and Hainan Haiqi 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 Hainan Haiqi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongfeng Automobile and Hainan Haiqi.
Diversification Opportunities for Dongfeng Automobile and Hainan Haiqi
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dongfeng and Hainan is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Dongfeng Automobile Co and Hainan Haiqi Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hainan Haiqi Transpo 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 Hainan Haiqi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hainan Haiqi Transpo has no effect on the direction of Dongfeng Automobile i.e., Dongfeng Automobile and Hainan Haiqi go up and down completely randomly.
Pair Corralation between Dongfeng Automobile and Hainan Haiqi
Assuming the 90 days trading horizon Dongfeng Automobile Co is expected to generate 0.96 times more return on investment than Hainan Haiqi. However, Dongfeng Automobile Co is 1.04 times less risky than Hainan Haiqi. It trades about 0.02 of its potential returns per unit of risk. Hainan Haiqi Transportation is currently generating about -0.01 per unit of risk. If you would invest 620.00 in Dongfeng Automobile Co on August 25, 2024 and sell it today you would earn a total of 80.00 from holding Dongfeng Automobile Co or generate 12.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongfeng Automobile Co vs. Hainan Haiqi Transportation
Performance |
| Timeline |
| Dongfeng Automobile |
| Hainan Haiqi Transpo |
Dongfeng Automobile and Hainan Haiqi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongfeng Automobile and Hainan Haiqi
The main advantage of trading using opposite Dongfeng Automobile and Hainan Haiqi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongfeng Automobile position performs unexpectedly, Hainan Haiqi 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 Hainan Haiqi will offset losses from the drop in Hainan Haiqi's long position.| Dongfeng Automobile vs. Lutian Machinery Co | Dongfeng Automobile vs. China Longyuan Power | Dongfeng Automobile vs. Changshu Tongrun Auto | Dongfeng Automobile vs. PetroChina Co Ltd |
| Hainan Haiqi vs. Dongfeng Automobile Co | Hainan Haiqi vs. Sinomach Automobile Co | Hainan Haiqi vs. China Reform Health | Hainan Haiqi vs. Heren Health 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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