Correlation Between Dazhong Transportation and Hangzhou Arcvideo
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By analyzing existing cross correlation between Dazhong Transportation Group and Hangzhou Arcvideo Technology, you can compare the effects of market volatilities on Dazhong Transportation and Hangzhou Arcvideo 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 Hangzhou Arcvideo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dazhong Transportation and Hangzhou Arcvideo.
Diversification Opportunities for Dazhong Transportation and Hangzhou Arcvideo
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dazhong and Hangzhou is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Dazhong Transportation Group and Hangzhou Arcvideo Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hangzhou Arcvideo 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 Hangzhou Arcvideo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hangzhou Arcvideo has no effect on the direction of Dazhong Transportation i.e., Dazhong Transportation and Hangzhou Arcvideo go up and down completely randomly.
Pair Corralation between Dazhong Transportation and Hangzhou Arcvideo
Assuming the 90 days trading horizon Dazhong Transportation is expected to generate 2.74 times less return on investment than Hangzhou Arcvideo. But when comparing it to its historical volatility, Dazhong Transportation Group is 1.52 times less risky than Hangzhou Arcvideo. It trades about 0.15 of its potential returns per unit of risk. Hangzhou Arcvideo Technology is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 2,419 in Hangzhou Arcvideo Technology on November 5, 2024 and sell it today you would earn a total of 316.00 from holding Hangzhou Arcvideo Technology or generate 13.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dazhong Transportation Group vs. Hangzhou Arcvideo Technology
Performance |
| Timeline |
| Dazhong Transportation |
| Hangzhou Arcvideo |
Dazhong Transportation and Hangzhou Arcvideo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dazhong Transportation and Hangzhou Arcvideo
The main advantage of trading using opposite Dazhong Transportation and Hangzhou Arcvideo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dazhong Transportation position performs unexpectedly, Hangzhou Arcvideo 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 Hangzhou Arcvideo will offset losses from the drop in Hangzhou Arcvideo's long position.The idea behind Dazhong Transportation Group and Hangzhou Arcvideo Technology 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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