Correlation Between Dazhong Transportation and King-Strong New
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By analyzing existing cross correlation between Dazhong Transportation Group and King Strong New Material, you can compare the effects of market volatilities on Dazhong Transportation and King-Strong New 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 King-Strong New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dazhong Transportation and King-Strong New.
Diversification Opportunities for Dazhong Transportation and King-Strong New
0.96 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Dazhong and King-Strong is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Dazhong Transportation Group and King Strong New Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on King Strong New 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 King-Strong New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of King Strong New has no effect on the direction of Dazhong Transportation i.e., Dazhong Transportation and King-Strong New go up and down completely randomly.
Pair Corralation between Dazhong Transportation and King-Strong New
Assuming the 90 days trading horizon Dazhong Transportation is expected to generate 2.7 times less return on investment than King-Strong New. But when comparing it to its historical volatility, Dazhong Transportation Group is 1.88 times less risky than King-Strong New. It trades about 0.08 of its potential returns per unit of risk. King Strong New Material is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 2,152 in King Strong New Material on September 1, 2024 and sell it today you would earn a total of 228.00 from holding King Strong New Material or generate 10.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dazhong Transportation Group vs. King Strong New Material
Performance |
| Timeline |
| Dazhong Transportation |
| King Strong New |
Dazhong Transportation and King-Strong New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dazhong Transportation and King-Strong New
The main advantage of trading using opposite Dazhong Transportation and King-Strong New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dazhong Transportation position performs unexpectedly, King-Strong New 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 King-Strong New will offset losses from the drop in King-Strong New's long position.The idea behind Dazhong Transportation Group and King Strong New Material 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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