Correlation Between Dufu Tech and JF Technology
Can any of the company-specific risk be diversified away by investing in both Dufu Tech and JF 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 Dufu Tech and JF Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dufu Tech Corp and JF Technology BHD, you can compare the effects of market volatilities on Dufu Tech and JF 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 Dufu Tech with a short position of JF Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dufu Tech and JF Technology.
Diversification Opportunities for Dufu Tech and JF Technology
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Dufu and 0146 is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Dufu Tech Corp and JF Technology BHD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JF Technology BHD and Dufu Tech 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 Dufu Tech Corp are associated (or correlated) with JF Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JF Technology BHD has no effect on the direction of Dufu Tech i.e., Dufu Tech and JF Technology go up and down completely randomly.
Pair Corralation between Dufu Tech and JF Technology
Assuming the 90 days trading horizon Dufu Tech Corp is expected to generate 0.86 times more return on investment than JF Technology. However, Dufu Tech Corp is 1.16 times less risky than JF Technology. It trades about -0.03 of its potential returns per unit of risk. JF Technology BHD is currently generating about -0.21 per unit of risk. If you would invest 171.00 in Dufu Tech Corp on August 28, 2024 and sell it today you would lose (3.00) from holding Dufu Tech Corp or give up 1.75% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dufu Tech Corp vs. JF Technology BHD
Performance |
| Timeline |
| Dufu Tech Corp |
| JF Technology BHD |
Dufu Tech and JF Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dufu Tech and JF Technology
The main advantage of trading using opposite Dufu Tech and JF Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dufu Tech position performs unexpectedly, JF 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 JF Technology will offset losses from the drop in JF Technology's long position.The idea behind Dufu Tech Corp and JF Technology BHD 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.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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