Correlation Between DATANG INTL and MAGNA INTL
Can any of the company-specific risk be diversified away by investing in both DATANG INTL and MAGNA INTL 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 MAGNA INTL 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 MAGNA INTL, you can compare the effects of market volatilities on DATANG INTL and MAGNA INTL 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 MAGNA INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATANG INTL and MAGNA INTL.
Diversification Opportunities for DATANG INTL and MAGNA INTL
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between DATANG and MAGNA is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding DATANG INTL POW and MAGNA INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAGNA INTL 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 MAGNA INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAGNA INTL has no effect on the direction of DATANG INTL i.e., DATANG INTL and MAGNA INTL go up and down completely randomly.
Pair Corralation between DATANG INTL and MAGNA INTL
Assuming the 90 days trading horizon DATANG INTL POW is expected to under-perform the MAGNA INTL. In addition to that, DATANG INTL is 1.61 times more volatile than MAGNA INTL. It trades about -0.01 of its total potential returns per unit of risk. MAGNA INTL is currently generating about 0.04 per unit of volatility. If you would invest 3,946 in MAGNA INTL on September 5, 2024 and sell it today you would earn a total of 352.00 from holding MAGNA INTL or generate 8.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.22% |
| Values | Daily Returns |
DATANG INTL POW vs. MAGNA INTL
Performance |
| Timeline |
| DATANG INTL POW |
| MAGNA INTL |
DATANG INTL and MAGNA INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DATANG INTL and MAGNA INTL
The main advantage of trading using opposite DATANG INTL and MAGNA INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATANG INTL position performs unexpectedly, MAGNA INTL 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 MAGNA INTL will offset losses from the drop in MAGNA INTL's long position.| DATANG INTL vs. TOTAL GABON | DATANG INTL vs. Walgreens Boots Alliance | DATANG INTL vs. Peak Resources Limited |
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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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