Correlation Between New China and Dongfeng Automobile
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By analyzing existing cross correlation between New China Life and Dongfeng Automobile Co, you can compare the effects of market volatilities on New China and Dongfeng Automobile 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 New China with a short position of Dongfeng Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of New China and Dongfeng Automobile.
Diversification Opportunities for New China and Dongfeng Automobile
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between New and Dongfeng is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding New China Life and Dongfeng Automobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongfeng Automobile and New China 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 New China Life are associated (or correlated) with Dongfeng Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongfeng Automobile has no effect on the direction of New China i.e., New China and Dongfeng Automobile go up and down completely randomly.
Pair Corralation between New China and Dongfeng Automobile
Assuming the 90 days trading horizon New China Life is expected to generate 0.82 times more return on investment than Dongfeng Automobile. However, New China Life is 1.21 times less risky than Dongfeng Automobile. It trades about 0.05 of its potential returns per unit of risk. Dongfeng Automobile Co is currently generating about 0.04 per unit of risk. If you would invest 3,177 in New China Life on September 28, 2024 and sell it today you would earn a total of 1,920 from holding New China Life or generate 60.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.79% |
| Values | Daily Returns |
New China Life vs. Dongfeng Automobile Co
Performance |
| Timeline |
| New China Life |
| Dongfeng Automobile |
New China and Dongfeng Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New China and Dongfeng Automobile
The main advantage of trading using opposite New China and Dongfeng Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New China position performs unexpectedly, Dongfeng Automobile 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 Dongfeng Automobile will offset losses from the drop in Dongfeng Automobile's long position.| New China vs. Grandblue Environment Co | New China vs. Shenzhen Centralcon Investment | New China vs. Henan Shuanghui Investment | New China vs. Nuode Investment Co |
| Dongfeng Automobile vs. New China Life | Dongfeng Automobile vs. Ming Yang Smart | Dongfeng Automobile vs. 159681 | Dongfeng Automobile vs. 159005 |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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