Correlation Between Datang International and United States
Can any of the company-specific risk be diversified away by investing in both Datang International and United States 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 Datang International and United States into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Datang International Power and United States Steel, you can compare the effects of market volatilities on Datang International and United States 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 Datang International with a short position of United States. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang International and United States.
Diversification Opportunities for Datang International and United States
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Datang and United is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Datang International Power and United States Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United States Steel and Datang International 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 Datang International Power are associated (or correlated) with United States. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United States Steel has no effect on the direction of Datang International i.e., Datang International and United States go up and down completely randomly.
Pair Corralation between Datang International and United States
Assuming the 90 days horizon Datang International is expected to generate 1.53 times less return on investment than United States. In addition to that, Datang International is 1.32 times more volatile than United States Steel. It trades about 0.03 of its total potential returns per unit of risk. United States Steel is currently generating about 0.07 per unit of volatility. If you would invest 2,091 in United States Steel on August 31, 2024 and sell it today you would earn a total of 1,699 from holding United States Steel or generate 81.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.74% |
| Values | Daily Returns |
Datang International Power vs. United States Steel
Performance |
| Timeline |
| Datang International |
| United States Steel |
Datang International and United States Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Datang International and United States
The main advantage of trading using opposite Datang International and United States positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datang International position performs unexpectedly, United States 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 United States will offset losses from the drop in United States' long position.| Datang International vs. CENTRICA ADR NEW | Datang International vs. TransAlta | Datang International vs. Superior Plus Corp | Datang International vs. NMI Holdings |
| United States vs. Canadian Utilities Limited | United States vs. Digilife Technologies Limited | United States vs. Eidesvik Offshore ASA | United States vs. BW OFFSHORE LTD |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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