Correlation Between Dawushan Farm and Li Kang
Can any of the company-specific risk be diversified away by investing in both Dawushan Farm and Li Kang 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 Li Kang 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 Li Kang Biomedical, you can compare the effects of market volatilities on Dawushan Farm and Li Kang 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 Li Kang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dawushan Farm and Li Kang.
Diversification Opportunities for Dawushan Farm and Li Kang
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dawushan and 6242 is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Dawushan Farm Tech and Li Kang Biomedical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Li Kang Biomedical 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 Li Kang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Li Kang Biomedical has no effect on the direction of Dawushan Farm i.e., Dawushan Farm and Li Kang go up and down completely randomly.
Pair Corralation between Dawushan Farm and Li Kang
Assuming the 90 days trading horizon Dawushan Farm Tech is expected to generate 1.79 times more return on investment than Li Kang. However, Dawushan Farm is 1.79 times more volatile than Li Kang Biomedical. It trades about 0.07 of its potential returns per unit of risk. Li Kang Biomedical is currently generating about -0.04 per unit of risk. If you would invest 4,665 in Dawushan Farm Tech on October 26, 2024 and sell it today you would earn a total of 325.00 from holding Dawushan Farm Tech or generate 6.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dawushan Farm Tech vs. Li Kang Biomedical
Performance |
| Timeline |
| Dawushan Farm Tech |
| Li Kang Biomedical |
Dawushan Farm and Li Kang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dawushan Farm and Li Kang
The main advantage of trading using opposite Dawushan Farm and Li Kang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dawushan Farm position performs unexpectedly, Li Kang 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 Li Kang will offset losses from the drop in Li Kang's long position.| Dawushan Farm vs. Shinkong Insurance Co | Dawushan Farm vs. Yuan High Tech Development | Dawushan Farm vs. Sesoda Corp | Dawushan Farm vs. Sun Max Tech |
| Li Kang vs. Dawushan Farm Tech | Li Kang vs. Dadi Early Childhood Education | Li Kang vs. Orient Semiconductor Electronics | Li Kang vs. Taiwan Semiconductor 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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