Correlation Between Cambricon Technologies and Dongfeng Automobile
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By analyzing existing cross correlation between Cambricon Technologies Corp and Dongfeng Automobile Co, you can compare the effects of market volatilities on Cambricon Technologies 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 Cambricon Technologies with a short position of Dongfeng Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cambricon Technologies and Dongfeng Automobile.
Diversification Opportunities for Cambricon Technologies and Dongfeng Automobile
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cambricon and Dongfeng is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Cambricon Technologies Corp and Dongfeng Automobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongfeng Automobile and Cambricon Technologies 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 Cambricon Technologies Corp 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 Cambricon Technologies i.e., Cambricon Technologies and Dongfeng Automobile go up and down completely randomly.
Pair Corralation between Cambricon Technologies and Dongfeng Automobile
Assuming the 90 days trading horizon Cambricon Technologies Corp is expected to generate 1.48 times more return on investment than Dongfeng Automobile. However, Cambricon Technologies is 1.48 times more volatile than Dongfeng Automobile Co. It trades about 0.12 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 16,543 in Cambricon Technologies Corp on September 15, 2024 and sell it today you would earn a total of 40,257 from holding Cambricon Technologies Corp or generate 243.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cambricon Technologies Corp vs. Dongfeng Automobile Co
Performance |
| Timeline |
| Cambricon Technologies |
| Dongfeng Automobile |
Cambricon Technologies and Dongfeng Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cambricon Technologies and Dongfeng Automobile
The main advantage of trading using opposite Cambricon Technologies and Dongfeng Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cambricon Technologies 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.The idea behind Cambricon Technologies Corp and Dongfeng Automobile 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.
| Dongfeng Automobile vs. Cambricon Technologies Corp | Dongfeng Automobile vs. Loongson Technology Corp | Dongfeng Automobile vs. Shenzhen Fortune Trend | Dongfeng Automobile vs. Chongqing Road Bridge |
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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