Correlation Between Dawning Information and Shanghai Electric
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By analyzing existing cross correlation between Dawning Information Industry and Shanghai Electric Group, you can compare the effects of market volatilities on Dawning Information and Shanghai Electric 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 Dawning Information with a short position of Shanghai Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dawning Information and Shanghai Electric.
Diversification Opportunities for Dawning Information and Shanghai Electric
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dawning and Shanghai is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Dawning Information Industry and Shanghai Electric Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Electric and Dawning Information 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 Dawning Information Industry are associated (or correlated) with Shanghai Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Electric has no effect on the direction of Dawning Information i.e., Dawning Information and Shanghai Electric go up and down completely randomly.
Pair Corralation between Dawning Information and Shanghai Electric
Assuming the 90 days trading horizon Dawning Information Industry is expected to generate 0.8 times more return on investment than Shanghai Electric. However, Dawning Information Industry is 1.24 times less risky than Shanghai Electric. It trades about -0.13 of its potential returns per unit of risk. Shanghai Electric Group is currently generating about -0.12 per unit of risk. If you would invest 8,390 in Dawning Information Industry on September 13, 2024 and sell it today you would lose (1,018) from holding Dawning Information Industry or give up 12.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Dawning Information Industry vs. Shanghai Electric Group
Performance |
| Timeline |
| Dawning Information |
| Shanghai Electric |
Dawning Information and Shanghai Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dawning Information and Shanghai Electric
The main advantage of trading using opposite Dawning Information and Shanghai Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dawning Information position performs unexpectedly, Shanghai Electric 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 Shanghai Electric will offset losses from the drop in Shanghai Electric's long position.The idea behind Dawning Information Industry and Shanghai Electric Group 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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