Correlation Between IMPERIAL TOBACCO and Datang International
Can any of the company-specific risk be diversified away by investing in both IMPERIAL TOBACCO and Datang International 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 IMPERIAL TOBACCO and Datang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between IMPERIAL TOBACCO and Datang International Power, you can compare the effects of market volatilities on IMPERIAL TOBACCO and Datang International 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 IMPERIAL TOBACCO with a short position of Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of IMPERIAL TOBACCO and Datang International.
Diversification Opportunities for IMPERIAL TOBACCO and Datang International
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between IMPERIAL and Datang is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding IMPERIAL TOBACCO and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO are associated (or correlated) with Datang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datang International has no effect on the direction of IMPERIAL TOBACCO i.e., IMPERIAL TOBACCO and Datang International go up and down completely randomly.
Pair Corralation between IMPERIAL TOBACCO and Datang International
Assuming the 90 days trading horizon IMPERIAL TOBACCO is expected to generate 0.35 times more return on investment than Datang International. However, IMPERIAL TOBACCO is 2.86 times less risky than Datang International. It trades about 0.25 of its potential returns per unit of risk. Datang International Power is currently generating about 0.02 per unit of risk. If you would invest 2,519 in IMPERIAL TOBACCO on September 3, 2024 and sell it today you would earn a total of 560.00 from holding IMPERIAL TOBACCO or generate 22.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
IMPERIAL TOBACCO vs. Datang International Power
Performance |
| Timeline |
| IMPERIAL TOBACCO |
| Datang International |
IMPERIAL TOBACCO and Datang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IMPERIAL TOBACCO and Datang International
The main advantage of trading using opposite IMPERIAL TOBACCO and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IMPERIAL TOBACCO position performs unexpectedly, Datang International 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 Datang International will offset losses from the drop in Datang International's long position.| IMPERIAL TOBACCO vs. Gamma Communications plc | IMPERIAL TOBACCO vs. WisdomTree Investments | IMPERIAL TOBACCO vs. Strategic Investments AS | IMPERIAL TOBACCO vs. ECHO INVESTMENT ZY |
| Datang International vs. CENTRICA ADR NEW | Datang International vs. Superior Plus Corp | Datang International vs. NMI Holdings | Datang International vs. Origin Agritech |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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