Correlation Between China DatangRenewable and Indutrade
Can any of the company-specific risk be diversified away by investing in both China DatangRenewable and Indutrade 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 Indutrade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Datang and Indutrade AB, you can compare the effects of market volatilities on China DatangRenewable and Indutrade 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 Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of China DatangRenewable and Indutrade.
Diversification Opportunities for China DatangRenewable and Indutrade
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Indutrade is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding China Datang and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB 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 Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of China DatangRenewable i.e., China DatangRenewable and Indutrade go up and down completely randomly.
Pair Corralation between China DatangRenewable and Indutrade
Assuming the 90 days horizon China DatangRenewable is expected to generate 21.43 times less return on investment than Indutrade. In addition to that, China DatangRenewable is 1.09 times more volatile than Indutrade AB. It trades about 0.01 of its total potential returns per unit of risk. Indutrade AB is currently generating about 0.21 per unit of volatility. If you would invest 2,448 in Indutrade AB on November 7, 2024 and sell it today you would earn a total of 182.00 from holding Indutrade AB or generate 7.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Datang vs. Indutrade AB
Performance |
| Timeline |
| China DatangRenewable |
| Indutrade AB |
China DatangRenewable and Indutrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China DatangRenewable and Indutrade
The main advantage of trading using opposite China DatangRenewable and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China DatangRenewable position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.| China DatangRenewable vs. Penta Ocean Construction Co | China DatangRenewable vs. UNIVERSAL MUSIC GROUP | China DatangRenewable vs. GEAR4MUSIC LS 10 | China DatangRenewable vs. Titan Machinery |
| Indutrade vs. Pentair plc | Indutrade vs. Sterling Construction | Indutrade vs. DAIRY FARM INTL | Indutrade vs. SYSTEMAIR AB |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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