Correlation Between Datang Telecom and Eastern Communications
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By analyzing existing cross correlation between Datang Telecom Technology and Eastern Communications Co, you can compare the effects of market volatilities on Datang Telecom and Eastern Communications 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 Datang Telecom with a short position of Eastern Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang Telecom and Eastern Communications.
Diversification Opportunities for Datang Telecom and Eastern Communications
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Datang and Eastern is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Datang Telecom Technology and Eastern Communications Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Communications and Datang Telecom 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 Datang Telecom Technology are associated (or correlated) with Eastern Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Communications has no effect on the direction of Datang Telecom i.e., Datang Telecom and Eastern Communications go up and down completely randomly.
Pair Corralation between Datang Telecom and Eastern Communications
Assuming the 90 days trading horizon Datang Telecom Technology is expected to generate 2.55 times more return on investment than Eastern Communications. However, Datang Telecom is 2.55 times more volatile than Eastern Communications Co. It trades about 0.01 of its potential returns per unit of risk. Eastern Communications Co is currently generating about 0.01 per unit of risk. If you would invest 1,080 in Datang Telecom Technology on August 25, 2024 and sell it today you would lose (28.00) from holding Datang Telecom Technology or give up 2.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Datang Telecom Technology vs. Eastern Communications Co
Performance |
| Timeline |
| Datang Telecom Technology |
| Eastern Communications |
Datang Telecom and Eastern Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Datang Telecom and Eastern Communications
The main advantage of trading using opposite Datang Telecom and Eastern Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datang Telecom position performs unexpectedly, Eastern Communications 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 Eastern Communications will offset losses from the drop in Eastern Communications' long position.| Datang Telecom vs. Touchstone International Medical | Datang Telecom vs. Beijing Wandong Medical | Datang Telecom vs. China National Software | Datang Telecom vs. Winner Medical 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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