Correlation Between Dawushan Farm and Cayenne Entertainment
Can any of the company-specific risk be diversified away by investing in both Dawushan Farm and Cayenne Entertainment 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 Dawushan Farm and Cayenne Entertainment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dawushan Farm Tech and Cayenne Entertainment Technology, you can compare the effects of market volatilities on Dawushan Farm and Cayenne Entertainment 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 Dawushan Farm with a short position of Cayenne Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dawushan Farm and Cayenne Entertainment.
Diversification Opportunities for Dawushan Farm and Cayenne Entertainment
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dawushan and Cayenne is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Dawushan Farm Tech and Cayenne Entertainment Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cayenne Entertainment and Dawushan Farm 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 Dawushan Farm Tech are associated (or correlated) with Cayenne Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cayenne Entertainment has no effect on the direction of Dawushan Farm i.e., Dawushan Farm and Cayenne Entertainment go up and down completely randomly.
Pair Corralation between Dawushan Farm and Cayenne Entertainment
Assuming the 90 days trading horizon Dawushan Farm Tech is expected to generate 1.43 times more return on investment than Cayenne Entertainment. However, Dawushan Farm is 1.43 times more volatile than Cayenne Entertainment Technology. It trades about 0.15 of its potential returns per unit of risk. Cayenne Entertainment Technology is currently generating about 0.13 per unit of risk. If you would invest 4,650 in Dawushan Farm Tech on September 2, 2024 and sell it today you would earn a total of 345.00 from holding Dawushan Farm Tech or generate 7.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dawushan Farm Tech vs. Cayenne Entertainment Technolo
Performance |
| Timeline |
| Dawushan Farm Tech |
| Cayenne Entertainment |
Dawushan Farm and Cayenne Entertainment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dawushan Farm and Cayenne Entertainment
The main advantage of trading using opposite Dawushan Farm and Cayenne Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dawushan Farm position performs unexpectedly, Cayenne Entertainment 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 Cayenne Entertainment will offset losses from the drop in Cayenne Entertainment's long position.| Dawushan Farm vs. Taiwan Semiconductor Manufacturing | Dawushan Farm vs. Hon Hai Precision | Dawushan Farm vs. MediaTek | Dawushan Farm vs. Chunghwa Telecom Co |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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