Correlation Between China DatangRenewable and Materialise
Can any of the company-specific risk be diversified away by investing in both China DatangRenewable and Materialise 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 China DatangRenewable and Materialise into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Datang and Materialise NV, you can compare the effects of market volatilities on China DatangRenewable and Materialise 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 China DatangRenewable with a short position of Materialise. Check out your portfolio center. Please also check ongoing floating volatility patterns of China DatangRenewable and Materialise.
Diversification Opportunities for China DatangRenewable and Materialise
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between China and Materialise is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding China Datang and Materialise NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materialise NV and China DatangRenewable 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 China Datang are associated (or correlated) with Materialise. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materialise NV has no effect on the direction of China DatangRenewable i.e., China DatangRenewable and Materialise go up and down completely randomly.
Pair Corralation between China DatangRenewable and Materialise
Assuming the 90 days horizon China Datang is expected to generate 1.43 times more return on investment than Materialise. However, China DatangRenewable is 1.43 times more volatile than Materialise NV. It trades about 0.05 of its potential returns per unit of risk. Materialise NV is currently generating about 0.0 per unit of risk. If you would invest 14.00 in China Datang on October 13, 2024 and sell it today you would earn a total of 10.00 from holding China Datang or generate 71.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Datang vs. Materialise NV
Performance |
| Timeline |
| China DatangRenewable |
| Materialise NV |
China DatangRenewable and Materialise Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China DatangRenewable and Materialise
The main advantage of trading using opposite China DatangRenewable and Materialise positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China DatangRenewable position performs unexpectedly, Materialise 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 Materialise will offset losses from the drop in Materialise's long position.| China DatangRenewable vs. Air New Zealand | China DatangRenewable vs. STMicroelectronics NV | China DatangRenewable vs. Nanjing Panda Electronics | China DatangRenewable vs. Samsung Electronics Co |
| Materialise vs. Linedata Services SA | Materialise vs. Cairo Communication SpA | Materialise vs. Singapore Telecommunications Limited | Materialise vs. China Datang |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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