Correlation Between Dufu Tech and Minetech Resources
Can any of the company-specific risk be diversified away by investing in both Dufu Tech and Minetech Resources 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 Minetech Resources 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 Minetech Resources Bhd, you can compare the effects of market volatilities on Dufu Tech and Minetech Resources 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 Minetech Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dufu Tech and Minetech Resources.
Diversification Opportunities for Dufu Tech and Minetech Resources
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dufu and Minetech is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Dufu Tech Corp and Minetech Resources Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Minetech Resources 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 Minetech Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Minetech Resources Bhd has no effect on the direction of Dufu Tech i.e., Dufu Tech and Minetech Resources go up and down completely randomly.
Pair Corralation between Dufu Tech and Minetech Resources
Assuming the 90 days trading horizon Dufu Tech Corp is expected to generate 0.41 times more return on investment than Minetech Resources. However, Dufu Tech Corp is 2.44 times less risky than Minetech Resources. It trades about -0.44 of its potential returns per unit of risk. Minetech Resources Bhd is currently generating about -0.24 per unit of risk. If you would invest 172.00 in Dufu Tech Corp on November 28, 2024 and sell it today you would lose (36.00) from holding Dufu Tech Corp or give up 20.93% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dufu Tech Corp vs. Minetech Resources Bhd
Performance |
| Timeline |
| Dufu Tech Corp |
| Minetech Resources Bhd |
Dufu Tech and Minetech Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dufu Tech and Minetech Resources
The main advantage of trading using opposite Dufu Tech and Minetech Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dufu Tech position performs unexpectedly, Minetech Resources 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 Minetech Resources will offset losses from the drop in Minetech Resources' long position.| Dufu Tech vs. Apex Healthcare Bhd | Dufu Tech vs. Binasat Communications Bhd | Dufu Tech vs. Public Bank Bhd | Dufu Tech vs. Icon Offshore Bhd |
| Minetech Resources vs. EA Technique M | Minetech Resources vs. Saudee Group Bhd | Minetech Resources vs. Digistar Bhd | Minetech Resources vs. AirAsia X Bhd |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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