Correlation Between Wuhan Yangtze and Digital China
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By analyzing existing cross correlation between Wuhan Yangtze Communication and Digital China Information, you can compare the effects of market volatilities on Wuhan Yangtze and Digital China 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 Wuhan Yangtze with a short position of Digital China. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wuhan Yangtze and Digital China.
Diversification Opportunities for Wuhan Yangtze and Digital China
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Wuhan and Digital is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Wuhan Yangtze Communication and Digital China Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Digital China Information and Wuhan Yangtze 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 Wuhan Yangtze Communication are associated (or correlated) with Digital China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Digital China Information has no effect on the direction of Wuhan Yangtze i.e., Wuhan Yangtze and Digital China go up and down completely randomly.
Pair Corralation between Wuhan Yangtze and Digital China
Assuming the 90 days trading horizon Wuhan Yangtze Communication is expected to generate 1.1 times more return on investment than Digital China. However, Wuhan Yangtze is 1.1 times more volatile than Digital China Information. It trades about 0.08 of its potential returns per unit of risk. Digital China Information is currently generating about 0.07 per unit of risk. If you would invest 1,627 in Wuhan Yangtze Communication on October 26, 2024 and sell it today you would earn a total of 561.00 from holding Wuhan Yangtze Communication or generate 34.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wuhan Yangtze Communication vs. Digital China Information
Performance |
| Timeline |
| Wuhan Yangtze Commun |
| Digital China Information |
Wuhan Yangtze and Digital China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wuhan Yangtze and Digital China
The main advantage of trading using opposite Wuhan Yangtze and Digital China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wuhan Yangtze position performs unexpectedly, Digital China 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 Digital China will offset losses from the drop in Digital China's long position.| Wuhan Yangtze vs. Shengda Mining Co | Wuhan Yangtze vs. Anhui Tongguan Copper | Wuhan Yangtze vs. Kidswant Children Products | Wuhan Yangtze vs. Shenyang Huitian Thermal |
| Digital China vs. China State Construction | Digital China vs. Poly Real Estate | Digital China vs. China Vanke Co | Digital China vs. China Merchants Shekou |
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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