Correlation Between Danaher and China New
Can any of the company-specific risk be diversified away by investing in both Danaher and China New 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 Danaher and China New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danaher and China New Energy, you can compare the effects of market volatilities on Danaher and China New 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 Danaher with a short position of China New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danaher and China New.
Diversification Opportunities for Danaher and China New
Very weak diversification
The 3 months correlation between Danaher and China is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Danaher and China New Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China New Energy and Danaher 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 Danaher are associated (or correlated) with China New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China New Energy has no effect on the direction of Danaher i.e., Danaher and China New go up and down completely randomly.
Pair Corralation between Danaher and China New
Considering the 90-day investment horizon Danaher is expected to generate 0.08 times more return on investment than China New. However, Danaher is 12.38 times less risky than China New. It trades about 0.23 of its potential returns per unit of risk. China New Energy is currently generating about -0.17 per unit of risk. If you would invest 22,828 in Danaher on October 21, 2024 and sell it today you would earn a total of 1,008 from holding Danaher or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danaher vs. China New Energy
Performance |
| Timeline |
| Danaher |
| China New Energy |
Danaher and China New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danaher and China New
The main advantage of trading using opposite Danaher and China New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danaher position performs unexpectedly, China New 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 China New will offset losses from the drop in China New's long position.| Danaher vs. Agilent Technologies | Danaher vs. Illumina | Danaher vs. IDEXX Laboratories | Danaher vs. Waters |
| China New vs. Icon Media Holdings | China New vs. Eline Entertainment Group | China New vs. Green Leaf Innovations | China New vs. Plandai Biotech |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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