Correlation Between PROSIEBENSAT1 MEDIADR4/ and DATANG INTL
Can any of the company-specific risk be diversified away by investing in both PROSIEBENSAT1 MEDIADR4/ and DATANG INTL 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 PROSIEBENSAT1 MEDIADR4/ and DATANG INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PROSIEBENSAT1 MEDIADR4 and DATANG INTL POW, you can compare the effects of market volatilities on PROSIEBENSAT1 MEDIADR4/ and DATANG INTL 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 PROSIEBENSAT1 MEDIADR4/ with a short position of DATANG INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PROSIEBENSAT1 MEDIADR4/ and DATANG INTL.
Diversification Opportunities for PROSIEBENSAT1 MEDIADR4/ and DATANG INTL
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PROSIEBENSAT1 and DATANG is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding PROSIEBENSAT1 MEDIADR4 and DATANG INTL POW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATANG INTL POW and PROSIEBENSAT1 MEDIADR4/ 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 PROSIEBENSAT1 MEDIADR4 are associated (or correlated) with DATANG INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATANG INTL POW has no effect on the direction of PROSIEBENSAT1 MEDIADR4/ i.e., PROSIEBENSAT1 MEDIADR4/ and DATANG INTL go up and down completely randomly.
Pair Corralation between PROSIEBENSAT1 MEDIADR4/ and DATANG INTL
Assuming the 90 days trading horizon PROSIEBENSAT1 MEDIADR4 is expected to under-perform the DATANG INTL. But the stock apears to be less risky and, when comparing its historical volatility, PROSIEBENSAT1 MEDIADR4 is 1.2 times less risky than DATANG INTL. The stock trades about -0.02 of its potential returns per unit of risk. The DATANG INTL POW is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 11.00 in DATANG INTL POW on October 7, 2024 and sell it today you would earn a total of 5.00 from holding DATANG INTL POW or generate 45.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PROSIEBENSAT1 MEDIADR4 vs. DATANG INTL POW
Performance |
| Timeline |
| PROSIEBENSAT1 MEDIADR4/ |
| DATANG INTL POW |
PROSIEBENSAT1 MEDIADR4/ and DATANG INTL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PROSIEBENSAT1 MEDIADR4/ and DATANG INTL
The main advantage of trading using opposite PROSIEBENSAT1 MEDIADR4/ and DATANG INTL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PROSIEBENSAT1 MEDIADR4/ position performs unexpectedly, DATANG INTL 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 INTL will offset losses from the drop in DATANG INTL's long position.| PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc | PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc | PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc | PROSIEBENSAT1 MEDIADR4/ vs. Apple Inc |
| DATANG INTL vs. Apple Inc | DATANG INTL vs. Apple Inc | DATANG INTL vs. Apple Inc | DATANG INTL vs. Apple Inc |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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