Correlation Between Zhangjiagang Freetrade and Dongnan Electronics
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By analyzing existing cross correlation between Zhangjiagang Freetrade Science and Dongnan Electronics Co, you can compare the effects of market volatilities on Zhangjiagang Freetrade and Dongnan Electronics 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 Zhangjiagang Freetrade with a short position of Dongnan Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhangjiagang Freetrade and Dongnan Electronics.
Diversification Opportunities for Zhangjiagang Freetrade and Dongnan Electronics
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Zhangjiagang and Dongnan is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Zhangjiagang Freetrade Science and Dongnan Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongnan Electronics and Zhangjiagang Freetrade 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 Zhangjiagang Freetrade Science are associated (or correlated) with Dongnan Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongnan Electronics has no effect on the direction of Zhangjiagang Freetrade i.e., Zhangjiagang Freetrade and Dongnan Electronics go up and down completely randomly.
Pair Corralation between Zhangjiagang Freetrade and Dongnan Electronics
Assuming the 90 days trading horizon Zhangjiagang Freetrade Science is expected to generate 0.79 times more return on investment than Dongnan Electronics. However, Zhangjiagang Freetrade Science is 1.26 times less risky than Dongnan Electronics. It trades about 0.02 of its potential returns per unit of risk. Dongnan Electronics Co is currently generating about -0.07 per unit of risk. If you would invest 359.00 in Zhangjiagang Freetrade Science on October 16, 2024 and sell it today you would earn a total of 3.00 from holding Zhangjiagang Freetrade Science or generate 0.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Zhangjiagang Freetrade Science vs. Dongnan Electronics Co
Performance |
| Timeline |
| Zhangjiagang Freetrade |
| Dongnan Electronics |
Zhangjiagang Freetrade and Dongnan Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Zhangjiagang Freetrade and Dongnan Electronics
The main advantage of trading using opposite Zhangjiagang Freetrade and Dongnan Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Zhangjiagang Freetrade position performs unexpectedly, Dongnan Electronics 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 Dongnan Electronics will offset losses from the drop in Dongnan Electronics' long position.The idea behind Zhangjiagang Freetrade Science and Dongnan Electronics Co pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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