Correlation Between CN DATANG and Waste Management
Can any of the company-specific risk be diversified away by investing in both CN DATANG and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on CN DATANG and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN DATANG and Waste Management.
Diversification Opportunities for CN DATANG and Waste Management
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between DT7 and Waste is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding CN DATANG C and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of CN DATANG i.e., CN DATANG and Waste Management go up and down completely randomly.
Pair Corralation between CN DATANG and Waste Management
Assuming the 90 days trading horizon CN DATANG C is expected to generate 2.21 times more return on investment than Waste Management. However, CN DATANG is 2.21 times more volatile than Waste Management. It trades about 0.09 of its potential returns per unit of risk. Waste Management is currently generating about 0.02 per unit of risk. If you would invest 22.00 in CN DATANG C on October 30, 2024 and sell it today you would earn a total of 3.00 from holding CN DATANG C or generate 13.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.33% |
| Values | Daily Returns |
CN DATANG C vs. Waste Management
Performance |
| Timeline |
| CN DATANG C |
| Waste Management |
CN DATANG and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN DATANG and Waste Management
The main advantage of trading using opposite CN DATANG and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN DATANG position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| CN DATANG vs. Perdoceo Education | CN DATANG vs. Australian Agricultural | CN DATANG vs. Sterling Construction | CN DATANG vs. Hitachi Construction Machinery |
| Waste Management vs. Cleanaway Waste Management | Waste Management vs. Virtu Financial | Waste Management vs. Jupiter Fund Management | Waste Management vs. Erste Group Bank |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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