Correlation Between Magna International and Datang International
Can any of the company-specific risk be diversified away by investing in both Magna International 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 Magna International and Datang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Magna International and Datang International Power, you can compare the effects of market volatilities on Magna International 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 Magna International with a short position of Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Magna International and Datang International.
Diversification Opportunities for Magna International and Datang International
-0.39 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Magna and Datang is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Magna International and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International and Magna International 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 Magna International 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 Magna International i.e., Magna International and Datang International go up and down completely randomly.
Pair Corralation between Magna International and Datang International
Assuming the 90 days horizon Magna International is expected to generate 0.44 times more return on investment than Datang International. However, Magna International is 2.27 times less risky than Datang International. It trades about -0.06 of its potential returns per unit of risk. Datang International Power is currently generating about -0.18 per unit of risk. If you would invest 4,050 in Magna International on October 21, 2024 and sell it today you would lose (77.00) from holding Magna International or give up 1.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Magna International vs. Datang International Power
Performance |
| Timeline |
| Magna International |
| Datang International |
Magna International and Datang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Magna International and Datang International
The main advantage of trading using opposite Magna International and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Magna International 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.| Magna International vs. Dno ASA | Magna International vs. DENSO P ADR | Magna International vs. Aptiv PLC | Magna International vs. Bridgestone |
| Datang International vs. Infrastrutture Wireless Italiane | Datang International vs. Synovus Financial Corp | Datang International vs. United Insurance Holdings | Datang International vs. BJs Restaurants |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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