Correlation Between China Datang and WESTERN DIGITAL
Can any of the company-specific risk be diversified away by investing in both China Datang and WESTERN DIGITAL 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 Datang and WESTERN DIGITAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Datang and WESTERN DIGITAL , you can compare the effects of market volatilities on China Datang and WESTERN DIGITAL 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 Datang with a short position of WESTERN DIGITAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Datang and WESTERN DIGITAL.
Diversification Opportunities for China Datang and WESTERN DIGITAL
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and WESTERN is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding China Datang and WESTERN DIGITAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WESTERN DIGITAL and China Datang 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 WESTERN DIGITAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WESTERN DIGITAL has no effect on the direction of China Datang i.e., China Datang and WESTERN DIGITAL go up and down completely randomly.
Pair Corralation between China Datang and WESTERN DIGITAL
Assuming the 90 days horizon China Datang is expected to generate 1.84 times more return on investment than WESTERN DIGITAL. However, China Datang is 1.84 times more volatile than WESTERN DIGITAL . It trades about 0.08 of its potential returns per unit of risk. WESTERN DIGITAL is currently generating about 0.06 per unit of risk. If you would invest 12.00 in China Datang on October 27, 2024 and sell it today you would earn a total of 13.00 from holding China Datang or generate 108.33% 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. WESTERN DIGITAL
Performance |
| Timeline |
| China Datang |
| WESTERN DIGITAL |
China Datang and WESTERN DIGITAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Datang and WESTERN DIGITAL
The main advantage of trading using opposite China Datang and WESTERN DIGITAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Datang position performs unexpectedly, WESTERN DIGITAL 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 WESTERN DIGITAL will offset losses from the drop in WESTERN DIGITAL's long position.| China Datang vs. NextEra Energy | China Datang vs. The Southern | China Datang vs. VERBUND AG | China Datang vs. PGE Corporation |
| WESTERN DIGITAL vs. Fortescue Metals Group | WESTERN DIGITAL vs. Jacquet Metal Service | WESTERN DIGITAL vs. PARKEN Sport Entertainment | WESTERN DIGITAL vs. Gol Intelligent Airlines |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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