Correlation Between DATANG INTL and X Fab
Can any of the company-specific risk be diversified away by investing in both DATANG INTL and X Fab 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 X Fab 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 X Fab Silicon, you can compare the effects of market volatilities on DATANG INTL and X Fab 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 X Fab. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATANG INTL and X Fab.
Diversification Opportunities for DATANG INTL and X Fab
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between DATANG and XFB is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding DATANG INTL POW and X Fab Silicon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on X Fab Silicon 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 X Fab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of X Fab Silicon has no effect on the direction of DATANG INTL i.e., DATANG INTL and X Fab go up and down completely randomly.
Pair Corralation between DATANG INTL and X Fab
Assuming the 90 days trading horizon DATANG INTL POW is expected to generate 1.65 times more return on investment than X Fab. However, DATANG INTL is 1.65 times more volatile than X Fab Silicon. It trades about 0.04 of its potential returns per unit of risk. X Fab Silicon is currently generating about -0.03 per unit of risk. If you would invest 10.00 in DATANG INTL POW on September 3, 2024 and sell it today you would earn a total of 6.00 from holding DATANG INTL POW or generate 60.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
DATANG INTL POW vs. X Fab Silicon
Performance |
| Timeline |
| DATANG INTL POW |
| X Fab Silicon |
DATANG INTL and X Fab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DATANG INTL and X Fab
The main advantage of trading using opposite DATANG INTL and X Fab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATANG INTL position performs unexpectedly, X Fab 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 X Fab will offset losses from the drop in X Fab's long position.| DATANG INTL vs. TOTAL GABON | DATANG INTL vs. Walgreens Boots Alliance | DATANG INTL vs. Peak Resources Limited |
| X Fab vs. Singapore Airlines Limited | X Fab vs. FANDIFI TECHNOLOGY P | X Fab vs. Microchip Technology Incorporated | X Fab vs. AECOM TECHNOLOGY |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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