Correlation Between Tengda Construction and Danhua Chemical
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By analyzing existing cross correlation between Tengda Construction Group and Danhua Chemical Technology, you can compare the effects of market volatilities on Tengda Construction and Danhua Chemical 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 Tengda Construction with a short position of Danhua Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tengda Construction and Danhua Chemical.
Diversification Opportunities for Tengda Construction and Danhua Chemical
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tengda and Danhua is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Tengda Construction Group and Danhua Chemical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danhua Chemical Tech and Tengda Construction 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 Tengda Construction Group are associated (or correlated) with Danhua Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danhua Chemical Tech has no effect on the direction of Tengda Construction i.e., Tengda Construction and Danhua Chemical go up and down completely randomly.
Pair Corralation between Tengda Construction and Danhua Chemical
Assuming the 90 days trading horizon Tengda Construction is expected to generate 2.33 times less return on investment than Danhua Chemical. But when comparing it to its historical volatility, Tengda Construction Group is 2.39 times less risky than Danhua Chemical. It trades about 0.15 of its potential returns per unit of risk. Danhua Chemical Technology is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 291.00 in Danhua Chemical Technology on September 12, 2024 and sell it today you would earn a total of 42.00 from holding Danhua Chemical Technology or generate 14.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Tengda Construction Group vs. Danhua Chemical Technology
Performance |
| Timeline |
| Tengda Construction |
| Danhua Chemical Tech |
Tengda Construction and Danhua Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tengda Construction and Danhua Chemical
The main advantage of trading using opposite Tengda Construction and Danhua Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tengda Construction position performs unexpectedly, Danhua Chemical 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 Danhua Chemical will offset losses from the drop in Danhua Chemical's long position.| Tengda Construction vs. Agricultural Bank of | Tengda Construction vs. Industrial and Commercial | Tengda Construction vs. Bank of China | Tengda Construction vs. PetroChina Co Ltd |
| Danhua Chemical vs. Super Dragon Engineering Plastics | Danhua Chemical vs. Fuda Alloy Materials | Danhua Chemical vs. Harvest Fund Management | Danhua Chemical vs. Xinke Material |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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