Correlation Between Dongfang Electric and Tonghua Grape
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By analyzing existing cross correlation between Dongfang Electric Corp and Tonghua Grape Wine, you can compare the effects of market volatilities on Dongfang Electric and Tonghua Grape 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 Dongfang Electric with a short position of Tonghua Grape. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dongfang Electric and Tonghua Grape.
Diversification Opportunities for Dongfang Electric and Tonghua Grape
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dongfang and Tonghua is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Dongfang Electric Corp and Tonghua Grape Wine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tonghua Grape Wine and Dongfang Electric 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 Dongfang Electric Corp are associated (or correlated) with Tonghua Grape. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tonghua Grape Wine has no effect on the direction of Dongfang Electric i.e., Dongfang Electric and Tonghua Grape go up and down completely randomly.
Pair Corralation between Dongfang Electric and Tonghua Grape
Assuming the 90 days trading horizon Dongfang Electric Corp is expected to under-perform the Tonghua Grape. But the stock apears to be less risky and, when comparing its historical volatility, Dongfang Electric Corp is 1.28 times less risky than Tonghua Grape. The stock trades about -0.02 of its potential returns per unit of risk. The Tonghua Grape Wine is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 341.00 in Tonghua Grape Wine on September 12, 2024 and sell it today you would lose (39.00) from holding Tonghua Grape Wine or give up 11.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dongfang Electric Corp vs. Tonghua Grape Wine
Performance |
| Timeline |
| Dongfang Electric Corp |
| Tonghua Grape Wine |
Dongfang Electric and Tonghua Grape Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dongfang Electric and Tonghua Grape
The main advantage of trading using opposite Dongfang Electric and Tonghua Grape positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dongfang Electric position performs unexpectedly, Tonghua Grape 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 Tonghua Grape will offset losses from the drop in Tonghua Grape's long position.| Dongfang Electric vs. China Nonferrous Metal | Dongfang Electric vs. Guocheng Mining Co | Dongfang Electric vs. Metallurgical of | Dongfang Electric vs. Pengxin International Mining |
| Tonghua Grape vs. China Petroleum Chemical | Tonghua Grape vs. PetroChina Co Ltd | Tonghua Grape vs. China State Construction | Tonghua Grape vs. China Railway Group |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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