Correlation Between China DatangRenewable and ZhongAn Online
Can any of the company-specific risk be diversified away by investing in both China DatangRenewable and ZhongAn Online 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 ZhongAn Online into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Datang and ZhongAn Online P, you can compare the effects of market volatilities on China DatangRenewable and ZhongAn Online 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 ZhongAn Online. Check out your portfolio center. Please also check ongoing floating volatility patterns of China DatangRenewable and ZhongAn Online.
Diversification Opportunities for China DatangRenewable and ZhongAn Online
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and ZhongAn is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding China Datang and ZhongAn Online P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZhongAn Online P 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 ZhongAn Online. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZhongAn Online P has no effect on the direction of China DatangRenewable i.e., China DatangRenewable and ZhongAn Online go up and down completely randomly.
Pair Corralation between China DatangRenewable and ZhongAn Online
Assuming the 90 days horizon China Datang is expected to generate 1.27 times more return on investment than ZhongAn Online. However, China DatangRenewable is 1.27 times more volatile than ZhongAn Online P. It trades about 0.04 of its potential returns per unit of risk. ZhongAn Online P is currently generating about -0.02 per unit of risk. If you would invest 16.00 in China Datang on November 9, 2024 and sell it today you would earn a total of 10.00 from holding China Datang or generate 62.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Datang vs. ZhongAn Online P
Performance |
| Timeline |
| China DatangRenewable |
| ZhongAn Online P |
China DatangRenewable and ZhongAn Online Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China DatangRenewable and ZhongAn Online
The main advantage of trading using opposite China DatangRenewable and ZhongAn Online positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China DatangRenewable position performs unexpectedly, ZhongAn Online 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 ZhongAn Online will offset losses from the drop in ZhongAn Online's long position.| China DatangRenewable vs. Chunghwa Telecom Co | China DatangRenewable vs. New Residential Investment | China DatangRenewable vs. Japan Asia Investment | China DatangRenewable vs. Ribbon Communications |
| ZhongAn Online vs. SQUIRREL MEDIA SA | ZhongAn Online vs. Elmos Semiconductor SE | ZhongAn Online vs. CNVISION MEDIA | ZhongAn Online vs. PROSIEBENSAT1 MEDIADR4 |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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