Correlation Between DingZing Advanced and Tehmag Foods
Can any of the company-specific risk be diversified away by investing in both DingZing Advanced and Tehmag Foods at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining DingZing Advanced and Tehmag Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DingZing Advanced Materials and Tehmag Foods, you can compare the effects of market volatilities on DingZing Advanced and Tehmag Foods 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 DingZing Advanced with a short position of Tehmag Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of DingZing Advanced and Tehmag Foods.
Diversification Opportunities for DingZing Advanced and Tehmag Foods
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between DingZing and Tehmag is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding DingZing Advanced Materials and Tehmag Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tehmag Foods and DingZing Advanced 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 DingZing Advanced Materials are associated (or correlated) with Tehmag Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tehmag Foods has no effect on the direction of DingZing Advanced i.e., DingZing Advanced and Tehmag Foods go up and down completely randomly.
Pair Corralation between DingZing Advanced and Tehmag Foods
Assuming the 90 days trading horizon DingZing Advanced Materials is expected to generate 4.12 times more return on investment than Tehmag Foods. However, DingZing Advanced is 4.12 times more volatile than Tehmag Foods. It trades about 0.17 of its potential returns per unit of risk. Tehmag Foods is currently generating about 0.28 per unit of risk. If you would invest 13,900 in DingZing Advanced Materials on October 12, 2024 and sell it today you would earn a total of 1,150 from holding DingZing Advanced Materials or generate 8.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DingZing Advanced Materials vs. Tehmag Foods
Performance |
| Timeline |
| DingZing Advanced |
| Tehmag Foods |
DingZing Advanced and Tehmag Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DingZing Advanced and Tehmag Foods
The main advantage of trading using opposite DingZing Advanced and Tehmag Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DingZing Advanced position performs unexpectedly, Tehmag Foods 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 Tehmag Foods will offset losses from the drop in Tehmag Foods' long position.| DingZing Advanced vs. Hsinli Chemical Industrial | DingZing Advanced vs. Acelon Chemicals Fiber | DingZing Advanced vs. Evermore Chemical Industry | DingZing Advanced vs. Double Bond Chemical |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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