Correlation Between DATANG INTL and Westlake Chemical
Can any of the company-specific risk be diversified away by investing in both DATANG INTL and Westlake Chemical 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 Westlake Chemical 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 Westlake Chemical, you can compare the effects of market volatilities on DATANG INTL and Westlake Chemical 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 Westlake Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATANG INTL and Westlake Chemical.
Diversification Opportunities for DATANG INTL and Westlake Chemical
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DATANG and Westlake is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding DATANG INTL POW and Westlake Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westlake Chemical 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 Westlake Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westlake Chemical has no effect on the direction of DATANG INTL i.e., DATANG INTL and Westlake Chemical go up and down completely randomly.
Pair Corralation between DATANG INTL and Westlake Chemical
Assuming the 90 days trading horizon DATANG INTL POW is expected to under-perform the Westlake Chemical. In addition to that, DATANG INTL is 1.73 times more volatile than Westlake Chemical. It trades about -0.08 of its total potential returns per unit of risk. Westlake Chemical is currently generating about 0.02 per unit of volatility. If you would invest 12,049 in Westlake Chemical on September 2, 2024 and sell it today you would earn a total of 51.00 from holding Westlake Chemical or generate 0.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DATANG INTL POW vs. Westlake Chemical
Performance |
| Timeline |
| DATANG INTL POW |
| Westlake Chemical |
DATANG INTL and Westlake Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DATANG INTL and Westlake Chemical
The main advantage of trading using opposite DATANG INTL and Westlake Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATANG INTL position performs unexpectedly, Westlake Chemical 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 Westlake Chemical will offset losses from the drop in Westlake Chemical'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 |
| Westlake Chemical vs. UNITED UTILITIES GR | Westlake Chemical vs. DATANG INTL POW | Westlake Chemical vs. G III Apparel Group | Westlake Chemical vs. TERADATA |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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