Correlation Between Digital China and Datavan International
Can any of the company-specific risk be diversified away by investing in both Digital China and Datavan International at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Digital China and Datavan International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Digital China Holdings and Datavan International, you can compare the effects of market volatilities on Digital China and Datavan 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 Digital China with a short position of Datavan International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital China and Datavan International.
Diversification Opportunities for Digital China and Datavan International
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Digital and Datavan is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Digital China Holdings and Datavan International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datavan International and Digital China 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 Digital China Holdings are associated (or correlated) with Datavan International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datavan International has no effect on the direction of Digital China i.e., Digital China and Datavan International go up and down completely randomly.
Pair Corralation between Digital China and Datavan International
Assuming the 90 days trading horizon Digital China Holdings is expected to generate 0.89 times more return on investment than Datavan International. However, Digital China Holdings is 1.12 times less risky than Datavan International. It trades about 0.39 of its potential returns per unit of risk. Datavan International is currently generating about 0.14 per unit of risk. If you would invest 571.00 in Digital China Holdings on September 1, 2024 and sell it today you would earn a total of 179.00 from holding Digital China Holdings or generate 31.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Digital China Holdings vs. Datavan International
Performance |
| Timeline |
| Digital China Holdings |
| Datavan International |
Digital China and Datavan International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Digital China and Datavan International
The main advantage of trading using opposite Digital China and Datavan International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital China position performs unexpectedly, Datavan 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 Datavan International will offset losses from the drop in Datavan International's long position.| Digital China vs. Acer E Enabling Service | Digital China vs. Green World Fintech | Digital China vs. Genesis Technology | Digital China vs. Syscom Computer Engineering |
| Datavan International vs. Catcher Technology Co | Datavan International vs. Darfon Electronics Corp | Datavan International vs. Digital China Holdings |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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