Correlation Between Dazhong Transportation and Xian International
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By analyzing existing cross correlation between Dazhong Transportation Group and Xian International Medical, you can compare the effects of market volatilities on Dazhong Transportation and Xian International 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 Dazhong Transportation with a short position of Xian International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dazhong Transportation and Xian International.
Diversification Opportunities for Dazhong Transportation and Xian International
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dazhong and Xian is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Dazhong Transportation Group and Xian International Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xian International and Dazhong Transportation 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 Dazhong Transportation Group are associated (or correlated) with Xian International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xian International has no effect on the direction of Dazhong Transportation i.e., Dazhong Transportation and Xian International go up and down completely randomly.
Pair Corralation between Dazhong Transportation and Xian International
Assuming the 90 days trading horizon Dazhong Transportation Group is expected to under-perform the Xian International. But the stock apears to be less risky and, when comparing its historical volatility, Dazhong Transportation Group is 1.54 times less risky than Xian International. The stock trades about -0.08 of its potential returns per unit of risk. The Xian International Medical is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 627.00 in Xian International Medical on September 14, 2024 and sell it today you would lose (9.00) from holding Xian International Medical or give up 1.44% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dazhong Transportation Group vs. Xian International Medical
Performance |
| Timeline |
| Dazhong Transportation |
| Xian International |
Dazhong Transportation and Xian International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dazhong Transportation and Xian International
The main advantage of trading using opposite Dazhong Transportation and Xian International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dazhong Transportation position performs unexpectedly, Xian International 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 Xian International will offset losses from the drop in Xian International's long position.The idea behind Dazhong Transportation Group and Xian International Medical 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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