Correlation Between MICRONIC MYDATA and Datang International

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Can any of the company-specific risk be diversified away by investing in both MICRONIC MYDATA 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 MICRONIC MYDATA and Datang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MICRONIC MYDATA and Datang International Power, you can compare the effects of market volatilities on MICRONIC MYDATA 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 MICRONIC MYDATA with a short position of Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of MICRONIC MYDATA and Datang International.

Diversification Opportunities for MICRONIC MYDATA and Datang International

0.29
  Correlation Coefficient

Modest diversification

The 3 months correlation between MICRONIC and Datang is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding MICRONIC MYDATA and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International and MICRONIC MYDATA 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 MICRONIC MYDATA 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 MICRONIC MYDATA i.e., MICRONIC MYDATA and Datang International go up and down completely randomly.

Pair Corralation between MICRONIC MYDATA and Datang International

Assuming the 90 days trading horizon MICRONIC MYDATA is expected to generate 0.58 times more return on investment than Datang International. However, MICRONIC MYDATA is 1.71 times less risky than Datang International. It trades about 0.09 of its potential returns per unit of risk. Datang International Power is currently generating about 0.03 per unit of risk. If you would invest  1,734  in MICRONIC MYDATA on August 31, 2024 and sell it today you would earn a total of  1,622  from holding MICRONIC MYDATA or generate 93.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy99.74%
ValuesDaily Returns

MICRONIC MYDATA  vs.  Datang International Power

 Performance 
       Timeline  
MICRONIC MYDATA 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in MICRONIC MYDATA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, MICRONIC MYDATA is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.
Datang International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Datang International Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Datang International is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

MICRONIC MYDATA and Datang International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with MICRONIC MYDATA and Datang International

The main advantage of trading using opposite MICRONIC MYDATA and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MICRONIC MYDATA 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.
The idea behind MICRONIC MYDATA and Datang International Power pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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