Correlation Between China Datang and ASPEN TECHINC
Can any of the company-specific risk be diversified away by investing in both China Datang and ASPEN TECHINC 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 ASPEN TECHINC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Datang and ASPEN TECHINC DL, you can compare the effects of market volatilities on China Datang and ASPEN TECHINC 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 ASPEN TECHINC. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Datang and ASPEN TECHINC.
Diversification Opportunities for China Datang and ASPEN TECHINC
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and ASPEN is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding China Datang and ASPEN TECHINC DL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ASPEN TECHINC DL 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 ASPEN TECHINC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ASPEN TECHINC DL has no effect on the direction of China Datang i.e., China Datang and ASPEN TECHINC go up and down completely randomly.
Pair Corralation between China Datang and ASPEN TECHINC
Assuming the 90 days horizon China Datang is expected to generate 9.65 times less return on investment than ASPEN TECHINC. In addition to that, China Datang is 2.49 times more volatile than ASPEN TECHINC DL. It trades about 0.01 of its total potential returns per unit of risk. ASPEN TECHINC DL is currently generating about 0.26 per unit of volatility. If you would invest 24,000 in ASPEN TECHINC DL on November 2, 2024 and sell it today you would earn a total of 1,200 from holding ASPEN TECHINC DL or generate 5.0% 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. ASPEN TECHINC DL
Performance |
| Timeline |
| China Datang |
| ASPEN TECHINC DL |
China Datang and ASPEN TECHINC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Datang and ASPEN TECHINC
The main advantage of trading using opposite China Datang and ASPEN TECHINC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Datang position performs unexpectedly, ASPEN TECHINC 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 ASPEN TECHINC will offset losses from the drop in ASPEN TECHINC's long position.| China Datang vs. InterContinental Hotels Group | China Datang vs. Aristocrat Leisure Limited | China Datang vs. Urban Outfitters | China Datang vs. Xenia Hotels Resorts |
| ASPEN TECHINC vs. KOBE STEEL LTD | ASPEN TECHINC vs. Mount Gibson Iron | ASPEN TECHINC vs. Strategic Education | ASPEN TECHINC vs. TAL Education Group |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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