Correlation Between Dawushan Farm and Chien Kuo
Can any of the company-specific risk be diversified away by investing in both Dawushan Farm and Chien Kuo 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 Chien Kuo 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 Chien Kuo Construction, you can compare the effects of market volatilities on Dawushan Farm and Chien Kuo 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 Chien Kuo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dawushan Farm and Chien Kuo.
Diversification Opportunities for Dawushan Farm and Chien Kuo
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dawushan and Chien is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dawushan Farm Tech and Chien Kuo Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chien Kuo Construction 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 Chien Kuo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chien Kuo Construction has no effect on the direction of Dawushan Farm i.e., Dawushan Farm and Chien Kuo go up and down completely randomly.
Pair Corralation between Dawushan Farm and Chien Kuo
Assuming the 90 days trading horizon Dawushan Farm Tech is expected to under-perform the Chien Kuo. But the stock apears to be less risky and, when comparing its historical volatility, Dawushan Farm Tech is 1.72 times less risky than Chien Kuo. The stock trades about -0.02 of its potential returns per unit of risk. The Chien Kuo Construction is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 2,320 in Chien Kuo Construction on November 28, 2024 and sell it today you would earn a total of 475.00 from holding Chien Kuo Construction or generate 20.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dawushan Farm Tech vs. Chien Kuo Construction
Performance |
| Timeline |
| Dawushan Farm Tech |
| Chien Kuo Construction |
Dawushan Farm and Chien Kuo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dawushan Farm and Chien Kuo
The main advantage of trading using opposite Dawushan Farm and Chien Kuo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dawushan Farm position performs unexpectedly, Chien Kuo 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 Chien Kuo will offset losses from the drop in Chien Kuo's long position.| Dawushan Farm vs. Cameo Communications | Dawushan Farm vs. Emerging Display Technologies | Dawushan Farm vs. Chung Lien Transportation | Dawushan Farm vs. Dadi Early Childhood Education |
| Chien Kuo vs. BES Engineering Co | Chien Kuo vs. Continental Holdings Corp | Chien Kuo vs. Kee Tai Properties | Chien Kuo vs. Hung Sheng Construction |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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