Correlation Between Dawushan Farm and Simplo Technology
Can any of the company-specific risk be diversified away by investing in both Dawushan Farm and Simplo Technology 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 Simplo Technology 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 Simplo Technology Co, you can compare the effects of market volatilities on Dawushan Farm and Simplo Technology 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 Simplo Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dawushan Farm and Simplo Technology.
Diversification Opportunities for Dawushan Farm and Simplo Technology
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dawushan and Simplo is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Dawushan Farm Tech and Simplo Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simplo Technology 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 Simplo Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simplo Technology has no effect on the direction of Dawushan Farm i.e., Dawushan Farm and Simplo Technology go up and down completely randomly.
Pair Corralation between Dawushan Farm and Simplo Technology
Assuming the 90 days trading horizon Dawushan Farm is expected to generate 2.33 times less return on investment than Simplo Technology. But when comparing it to its historical volatility, Dawushan Farm Tech is 1.23 times less risky than Simplo Technology. It trades about 0.13 of its potential returns per unit of risk. Simplo Technology Co is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 33,700 in Simplo Technology Co on September 4, 2024 and sell it today you would earn a total of 5,300 from holding Simplo Technology Co or generate 15.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dawushan Farm Tech vs. Simplo Technology Co
Performance |
| Timeline |
| Dawushan Farm Tech |
| Simplo Technology |
Dawushan Farm and Simplo Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dawushan Farm and Simplo Technology
The main advantage of trading using opposite Dawushan Farm and Simplo Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dawushan Farm position performs unexpectedly, Simplo Technology 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 Simplo Technology will offset losses from the drop in Simplo Technology'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 |
| Simplo Technology vs. Eclat Textile Co | Simplo Technology vs. WiseChip Semiconductor | Simplo Technology vs. Novatek Microelectronics Corp | Simplo Technology vs. Leader Electronics |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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