Correlation Between Discover Financial and Shengkai Innovations
Can any of the company-specific risk be diversified away by investing in both Discover Financial and Shengkai Innovations 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 Discover Financial and Shengkai Innovations into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Discover Financial Services and Shengkai Innovations, you can compare the effects of market volatilities on Discover Financial and Shengkai Innovations 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 Discover Financial with a short position of Shengkai Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Discover Financial and Shengkai Innovations.
Diversification Opportunities for Discover Financial and Shengkai Innovations
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Discover and Shengkai is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Discover Financial Services and Shengkai Innovations in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shengkai Innovations and Discover Financial 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 Discover Financial Services are associated (or correlated) with Shengkai Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shengkai Innovations has no effect on the direction of Discover Financial i.e., Discover Financial and Shengkai Innovations go up and down completely randomly.
Pair Corralation between Discover Financial and Shengkai Innovations
If you would invest 10,674 in Discover Financial Services on September 14, 2024 and sell it today you would earn a total of 6,948 from holding Discover Financial Services or generate 65.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 0.4% |
| Values | Daily Returns |
Discover Financial Services vs. Shengkai Innovations
Performance |
| Timeline |
| Discover Financial |
| Shengkai Innovations |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Discover Financial and Shengkai Innovations Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Discover Financial and Shengkai Innovations
The main advantage of trading using opposite Discover Financial and Shengkai Innovations positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Discover Financial position performs unexpectedly, Shengkai Innovations 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 Shengkai Innovations will offset losses from the drop in Shengkai Innovations' long position.| Discover Financial vs. Visa Class A | Discover Financial vs. PayPal Holdings | Discover Financial vs. Upstart Holdings | Discover Financial vs. Mastercard |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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