Correlation Between China Shenhua and Diamyd Medical
Can any of the company-specific risk be diversified away by investing in both China Shenhua and Diamyd Medical 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 China Shenhua and Diamyd Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Shenhua Energy and Diamyd Medical AB, you can compare the effects of market volatilities on China Shenhua and Diamyd Medical 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 China Shenhua with a short position of Diamyd Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Shenhua and Diamyd Medical.
Diversification Opportunities for China Shenhua and Diamyd Medical
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Diamyd is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding China Shenhua Energy and Diamyd Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamyd Medical AB and China Shenhua 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 China Shenhua Energy are associated (or correlated) with Diamyd Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamyd Medical AB has no effect on the direction of China Shenhua i.e., China Shenhua and Diamyd Medical go up and down completely randomly.
Pair Corralation between China Shenhua and Diamyd Medical
Assuming the 90 days horizon China Shenhua Energy is expected to under-perform the Diamyd Medical. But the stock apears to be less risky and, when comparing its historical volatility, China Shenhua Energy is 1.07 times less risky than Diamyd Medical. The stock trades about -0.02 of its potential returns per unit of risk. The Diamyd Medical AB is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 73.00 in Diamyd Medical AB on January 9, 2025 and sell it today you would lose (1.00) from holding Diamyd Medical AB or give up 1.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
China Shenhua Energy vs. Diamyd Medical AB
Performance |
| Timeline |
| China Shenhua Energy |
| Diamyd Medical AB |
China Shenhua and Diamyd Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Shenhua and Diamyd Medical
The main advantage of trading using opposite China Shenhua and Diamyd Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Shenhua position performs unexpectedly, Diamyd Medical 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 Diamyd Medical will offset losses from the drop in Diamyd Medical's long position.| China Shenhua vs. PT Bayan Resources | China Shenhua vs. Yanzhou Coal Mining | China Shenhua vs. PT Adaro Energy | China Shenhua vs. Yancoal Australia |
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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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