Correlation Between RangDong Plastic and Ducgiang Chemicals
Can any of the company-specific risk be diversified away by investing in both RangDong Plastic and Ducgiang Chemicals 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 RangDong Plastic and Ducgiang Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RangDong Plastic JSC and Ducgiang Chemicals Detergent, you can compare the effects of market volatilities on RangDong Plastic and Ducgiang Chemicals 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 RangDong Plastic with a short position of Ducgiang Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of RangDong Plastic and Ducgiang Chemicals.
Diversification Opportunities for RangDong Plastic and Ducgiang Chemicals
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between RangDong and Ducgiang is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding RangDong Plastic JSC and Ducgiang Chemicals Detergent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ducgiang Chemicals and RangDong Plastic 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 RangDong Plastic JSC are associated (or correlated) with Ducgiang Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ducgiang Chemicals has no effect on the direction of RangDong Plastic i.e., RangDong Plastic and Ducgiang Chemicals go up and down completely randomly.
Pair Corralation between RangDong Plastic and Ducgiang Chemicals
Assuming the 90 days trading horizon RangDong Plastic JSC is expected to under-perform the Ducgiang Chemicals. In addition to that, RangDong Plastic is 1.65 times more volatile than Ducgiang Chemicals Detergent. It trades about -0.25 of its total potential returns per unit of risk. Ducgiang Chemicals Detergent is currently generating about 0.07 per unit of volatility. If you would invest 8,819,469 in Ducgiang Chemicals Detergent on August 29, 2024 and sell it today you would earn a total of 2,530,531 from holding Ducgiang Chemicals Detergent or generate 28.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
RangDong Plastic JSC vs. Ducgiang Chemicals Detergent
Performance |
| Timeline |
| RangDong Plastic JSC |
| Ducgiang Chemicals |
RangDong Plastic and Ducgiang Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RangDong Plastic and Ducgiang Chemicals
The main advantage of trading using opposite RangDong Plastic and Ducgiang Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RangDong Plastic position performs unexpectedly, Ducgiang Chemicals 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 Ducgiang Chemicals will offset losses from the drop in Ducgiang Chemicals' long position.| RangDong Plastic vs. FIT INVEST JSC | RangDong Plastic vs. Damsan JSC | RangDong Plastic vs. An Phat Plastic | RangDong Plastic vs. Alphanam ME |
| Ducgiang Chemicals vs. FIT INVEST JSC | Ducgiang Chemicals vs. Damsan JSC | Ducgiang Chemicals vs. An Phat Plastic | Ducgiang Chemicals vs. Alphanam ME |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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