Correlation Between Dazhong Transportation and Suzhou Weizhixiang
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By analyzing existing cross correlation between Dazhong Transportation Group and Suzhou Weizhixiang Food, you can compare the effects of market volatilities on Dazhong Transportation and Suzhou Weizhixiang 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 Suzhou Weizhixiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dazhong Transportation and Suzhou Weizhixiang.
Diversification Opportunities for Dazhong Transportation and Suzhou Weizhixiang
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dazhong and Suzhou is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Dazhong Transportation Group and Suzhou Weizhixiang Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suzhou Weizhixiang Food 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 Suzhou Weizhixiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suzhou Weizhixiang Food has no effect on the direction of Dazhong Transportation i.e., Dazhong Transportation and Suzhou Weizhixiang go up and down completely randomly.
Pair Corralation between Dazhong Transportation and Suzhou Weizhixiang
Assuming the 90 days trading horizon Dazhong Transportation Group is expected to generate 0.57 times more return on investment than Suzhou Weizhixiang. However, Dazhong Transportation Group is 1.76 times less risky than Suzhou Weizhixiang. It trades about -0.35 of its potential returns per unit of risk. Suzhou Weizhixiang Food is currently generating about -0.23 per unit of risk. If you would invest 26.00 in Dazhong Transportation Group on October 11, 2024 and sell it today you would lose (4.00) from holding Dazhong Transportation Group or give up 15.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Dazhong Transportation Group vs. Suzhou Weizhixiang Food
Performance |
| Timeline |
| Dazhong Transportation |
| Suzhou Weizhixiang Food |
Dazhong Transportation and Suzhou Weizhixiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dazhong Transportation and Suzhou Weizhixiang
The main advantage of trading using opposite Dazhong Transportation and Suzhou Weizhixiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dazhong Transportation position performs unexpectedly, Suzhou Weizhixiang 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 Suzhou Weizhixiang will offset losses from the drop in Suzhou Weizhixiang's long position.The idea behind Dazhong Transportation Group and Suzhou Weizhixiang Food 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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