Correlation Between CN DATANG and GREENLIGHT CAP
Can any of the company-specific risk be diversified away by investing in both CN DATANG and GREENLIGHT CAP 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 GREENLIGHT CAP 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 GREENLIGHT CAP RE, you can compare the effects of market volatilities on CN DATANG and GREENLIGHT CAP 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 GREENLIGHT CAP. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN DATANG and GREENLIGHT CAP.
Diversification Opportunities for CN DATANG and GREENLIGHT CAP
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DT7 and GREENLIGHT is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding CN DATANG C and GREENLIGHT CAP RE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GREENLIGHT CAP RE 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 GREENLIGHT CAP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GREENLIGHT CAP RE has no effect on the direction of CN DATANG i.e., CN DATANG and GREENLIGHT CAP go up and down completely randomly.
Pair Corralation between CN DATANG and GREENLIGHT CAP
Assuming the 90 days trading horizon CN DATANG C is expected to generate 2.55 times more return on investment than GREENLIGHT CAP. However, CN DATANG is 2.55 times more volatile than GREENLIGHT CAP RE. It trades about 0.05 of its potential returns per unit of risk. GREENLIGHT CAP RE is currently generating about 0.05 per unit of risk. If you would invest 14.00 in CN DATANG C on October 28, 2024 and sell it today you would earn a total of 10.00 from holding CN DATANG C or generate 71.43% 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. GREENLIGHT CAP RE
Performance |
| Timeline |
| CN DATANG C |
| GREENLIGHT CAP RE |
CN DATANG and GREENLIGHT CAP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN DATANG and GREENLIGHT CAP
The main advantage of trading using opposite CN DATANG and GREENLIGHT CAP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN DATANG position performs unexpectedly, GREENLIGHT CAP 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 GREENLIGHT CAP will offset losses from the drop in GREENLIGHT CAP's long position.The idea behind CN DATANG C and GREENLIGHT CAP RE pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| GREENLIGHT CAP vs. Iridium Communications | GREENLIGHT CAP vs. China Communications Services | GREENLIGHT CAP vs. SIEM OFFSHORE NEW | GREENLIGHT CAP vs. Scandinavian Tobacco 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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