Correlation Between CN DATANG and ADT
Can any of the company-specific risk be diversified away by investing in both CN DATANG and ADT 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 CN DATANG and ADT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN DATANG C and ADT Inc, you can compare the effects of market volatilities on CN DATANG and ADT 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 CN DATANG with a short position of ADT. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN DATANG and ADT.
Diversification Opportunities for CN DATANG and ADT
Weak diversification
The 3 months correlation between DT7 and ADT is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding CN DATANG C and ADT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADT Inc and CN 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 CN DATANG C are associated (or correlated) with ADT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADT Inc has no effect on the direction of CN DATANG i.e., CN DATANG and ADT go up and down completely randomly.
Pair Corralation between CN DATANG and ADT
Assuming the 90 days trading horizon CN DATANG C is expected to generate 1.88 times more return on investment than ADT. However, CN DATANG is 1.88 times more volatile than ADT Inc. It trades about 0.06 of its potential returns per unit of risk. ADT Inc is currently generating about -0.06 per unit of risk. If you would invest 23.00 in CN DATANG C on October 16, 2024 and sell it today you would earn a total of 1.00 from holding CN DATANG C or generate 4.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN DATANG C vs. ADT Inc
Performance |
| Timeline |
| CN DATANG C |
| ADT Inc |
CN DATANG and ADT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN DATANG and ADT
The main advantage of trading using opposite CN DATANG and ADT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN DATANG position performs unexpectedly, ADT 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 ADT will offset losses from the drop in ADT's long position.| CN DATANG vs. PICKN PAY STORES | CN DATANG vs. MARKET VECTR RETAIL | CN DATANG vs. ASPEN TECHINC DL | CN DATANG vs. Fast Retailing Co |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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