Correlation Between Dongfeng Automobile and Beijing YanDong
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By analyzing existing cross correlation between Dongfeng Automobile Co and Beijing YanDong MicroElectronic, you can compare the effects of market volatilities on Dongfeng Automobile and Beijing YanDong 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 Beijing YanDong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongfeng Automobile and Beijing YanDong.
Diversification Opportunities for Dongfeng Automobile and Beijing YanDong
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dongfeng and Beijing is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Dongfeng Automobile Co and Beijing YanDong MicroElectroni in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing YanDong Micr 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 Beijing YanDong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing YanDong Micr has no effect on the direction of Dongfeng Automobile i.e., Dongfeng Automobile and Beijing YanDong go up and down completely randomly.
Pair Corralation between Dongfeng Automobile and Beijing YanDong
Assuming the 90 days trading horizon Dongfeng Automobile is expected to generate 1.07 times less return on investment than Beijing YanDong. But when comparing it to its historical volatility, Dongfeng Automobile Co is 1.19 times less risky than Beijing YanDong. It trades about 0.04 of its potential returns per unit of risk. Beijing YanDong MicroElectronic is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,846 in Beijing YanDong MicroElectronic on December 11, 2024 and sell it today you would earn a total of 349.00 from holding Beijing YanDong MicroElectronic or generate 18.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongfeng Automobile Co vs. Beijing YanDong MicroElectroni
Performance |
| Timeline |
| Dongfeng Automobile |
| Beijing YanDong Micr |
Dongfeng Automobile and Beijing YanDong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongfeng Automobile and Beijing YanDong
The main advantage of trading using opposite Dongfeng Automobile and Beijing YanDong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongfeng Automobile position performs unexpectedly, Beijing YanDong 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 Beijing YanDong will offset losses from the drop in Beijing YanDong's long position.| Dongfeng Automobile vs. NBTM New Materials | ||
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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