Correlation Between GEAR4MUSIC and CN DATANG
Can any of the company-specific risk be diversified away by investing in both GEAR4MUSIC and CN DATANG 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 GEAR4MUSIC and CN DATANG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GEAR4MUSIC LS 10 and CN DATANG C, you can compare the effects of market volatilities on GEAR4MUSIC and CN DATANG 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 GEAR4MUSIC with a short position of CN DATANG. Check out your portfolio center. Please also check ongoing floating volatility patterns of GEAR4MUSIC and CN DATANG.
Diversification Opportunities for GEAR4MUSIC and CN DATANG
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between GEAR4MUSIC and DT7 is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding GEAR4MUSIC LS 10 and CN DATANG C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CN DATANG C and GEAR4MUSIC 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 GEAR4MUSIC LS 10 are associated (or correlated) with CN DATANG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CN DATANG C has no effect on the direction of GEAR4MUSIC i.e., GEAR4MUSIC and CN DATANG go up and down completely randomly.
Pair Corralation between GEAR4MUSIC and CN DATANG
Assuming the 90 days horizon GEAR4MUSIC is expected to generate 1.37 times less return on investment than CN DATANG. But when comparing it to its historical volatility, GEAR4MUSIC LS 10 is 1.46 times less risky than CN DATANG. It trades about 0.05 of its potential returns per unit of risk. CN DATANG C is currently generating about 0.05 of returns per unit of risk over similar time horizon. 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GEAR4MUSIC LS 10 vs. CN DATANG C
Performance |
| Timeline |
| GEAR4MUSIC LS 10 |
| CN DATANG C |
GEAR4MUSIC and CN DATANG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GEAR4MUSIC and CN DATANG
The main advantage of trading using opposite GEAR4MUSIC and CN DATANG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GEAR4MUSIC position performs unexpectedly, CN DATANG 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 CN DATANG will offset losses from the drop in CN DATANG's long position.| GEAR4MUSIC vs. De Grey Mining | GEAR4MUSIC vs. Yanzhou Coal Mining | GEAR4MUSIC vs. NURAN WIRELESS INC | GEAR4MUSIC vs. COLUMBIA SPORTSWEAR |
| CN DATANG vs. Perdoceo Education | CN DATANG vs. Australian Agricultural | CN DATANG vs. Sterling Construction | CN DATANG vs. Hitachi Construction Machinery |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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