Correlation Between DATANG INTL and Datang International
Can any of the company-specific risk be diversified away by investing in both DATANG INTL and Datang 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 DATANG INTL and Datang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DATANG INTL POW and Datang International Power, you can compare the effects of market volatilities on DATANG INTL and Datang 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 DATANG INTL with a short position of Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATANG INTL and Datang International.
Diversification Opportunities for DATANG INTL and Datang International
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between DATANG and Datang is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding DATANG INTL POW and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International and DATANG INTL 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 INTL POW are associated (or correlated) with Datang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datang International has no effect on the direction of DATANG INTL i.e., DATANG INTL and Datang International go up and down completely randomly.
Pair Corralation between DATANG INTL and Datang International
Assuming the 90 days trading horizon DATANG INTL POW is expected to generate 1.02 times more return on investment than Datang International. However, DATANG INTL is 1.02 times more volatile than Datang International Power. It trades about 0.03 of its potential returns per unit of risk. Datang International Power is currently generating about 0.03 per unit of risk. If you would invest 13.00 in DATANG INTL POW on August 31, 2024 and sell it today you would earn a total of 3.00 from holding DATANG INTL POW or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.74% |
| Values | Daily Returns |
DATANG INTL POW vs. Datang International Power
Performance |
| Timeline |
| DATANG INTL POW |
| Datang International |
DATANG INTL and Datang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DATANG INTL and Datang International
The main advantage of trading using opposite DATANG INTL and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATANG INTL position performs unexpectedly, Datang 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 Datang International will offset losses from the drop in Datang International's long position.| DATANG INTL vs. SIVERS SEMICONDUCTORS AB | DATANG INTL vs. Darden Restaurants | DATANG INTL vs. Reliance Steel Aluminum | DATANG INTL vs. Q2M Managementberatung AG |
| Datang International vs. CENTRICA ADR NEW | Datang International vs. TransAlta | Datang International vs. Superior Plus Corp | Datang International vs. NMI 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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