Correlation Between CN DATANG and Addtech AB
Can any of the company-specific risk be diversified away by investing in both CN DATANG and Addtech AB 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 Addtech AB 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 Addtech AB, you can compare the effects of market volatilities on CN DATANG and Addtech AB 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 Addtech AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN DATANG and Addtech AB.
Diversification Opportunities for CN DATANG and Addtech AB
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DT7 and Addtech is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding CN DATANG C and Addtech AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Addtech AB 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 Addtech AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Addtech AB has no effect on the direction of CN DATANG i.e., CN DATANG and Addtech AB go up and down completely randomly.
Pair Corralation between CN DATANG and Addtech AB
Assuming the 90 days trading horizon CN DATANG C is expected to generate 1.88 times more return on investment than Addtech AB. However, CN DATANG is 1.88 times more volatile than Addtech AB. It trades about 0.05 of its potential returns per unit of risk. Addtech AB is currently generating about 0.08 per unit of risk. If you would invest 14.00 in CN DATANG C on October 30, 2024 and sell it today you would earn a total of 11.00 from holding CN DATANG C or generate 78.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN DATANG C vs. Addtech AB
Performance |
| Timeline |
| CN DATANG C |
| Addtech AB |
CN DATANG and Addtech AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN DATANG and Addtech AB
The main advantage of trading using opposite CN DATANG and Addtech AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN DATANG position performs unexpectedly, Addtech AB 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 Addtech AB will offset losses from the drop in Addtech AB's long position.| CN DATANG vs. Perdoceo Education | CN DATANG vs. Australian Agricultural | CN DATANG vs. Sterling Construction | CN DATANG vs. Hitachi Construction Machinery |
| Addtech AB vs. Neinor Homes SA | Addtech AB vs. Daito Trust Construction | Addtech AB vs. AGRICULTBK HADR25 YC | Addtech AB vs. CITY OFFICE REIT |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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