Correlation Between Dazhong Transportation and New Hope
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By analyzing existing cross correlation between Dazhong Transportation Group and New Hope Dairy, you can compare the effects of market volatilities on Dazhong Transportation and New Hope 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 New Hope. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dazhong Transportation and New Hope.
Diversification Opportunities for Dazhong Transportation and New Hope
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Dazhong and New is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dazhong Transportation Group and New Hope Dairy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Hope Dairy 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 New Hope. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Hope Dairy has no effect on the direction of Dazhong Transportation i.e., Dazhong Transportation and New Hope go up and down completely randomly.
Pair Corralation between Dazhong Transportation and New Hope
Assuming the 90 days trading horizon Dazhong Transportation Group is expected to under-perform the New Hope. But the stock apears to be less risky and, when comparing its historical volatility, Dazhong Transportation Group is 1.39 times less risky than New Hope. The stock trades about -0.35 of its potential returns per unit of risk. The New Hope Dairy is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 1,448 in New Hope Dairy on October 11, 2024 and sell it today you would earn a total of 143.00 from holding New Hope Dairy or generate 9.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dazhong Transportation Group vs. New Hope Dairy
Performance |
| Timeline |
| Dazhong Transportation |
| New Hope Dairy |
Dazhong Transportation and New Hope Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dazhong Transportation and New Hope
The main advantage of trading using opposite Dazhong Transportation and New Hope positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dazhong Transportation position performs unexpectedly, New Hope 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 New Hope will offset losses from the drop in New Hope's long position.The idea behind Dazhong Transportation Group and New Hope Dairy 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.
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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