Correlation Between THORNEY TECHS and Datang International
Can any of the company-specific risk be diversified away by investing in both THORNEY TECHS 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 THORNEY TECHS and Datang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between THORNEY TECHS LTD and Datang International Power, you can compare the effects of market volatilities on THORNEY TECHS 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 THORNEY TECHS with a short position of Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of THORNEY TECHS and Datang International.
Diversification Opportunities for THORNEY TECHS and Datang International
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between THORNEY and Datang is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding THORNEY TECHS LTD and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International and THORNEY TECHS 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 THORNEY TECHS LTD 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 THORNEY TECHS i.e., THORNEY TECHS and Datang International go up and down completely randomly.
Pair Corralation between THORNEY TECHS and Datang International
Assuming the 90 days horizon THORNEY TECHS is expected to generate 2.81 times less return on investment than Datang International. In addition to that, THORNEY TECHS is 1.45 times more volatile than Datang International Power. It trades about 0.01 of its total potential returns per unit of risk. Datang International Power is currently generating about 0.05 per unit of volatility. If you would invest 13.00 in Datang International Power on September 20, 2024 and sell it today you would earn a total of 5.00 from holding Datang International Power or generate 38.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
THORNEY TECHS LTD vs. Datang International Power
Performance |
| Timeline |
| THORNEY TECHS LTD |
| Datang International |
THORNEY TECHS and Datang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with THORNEY TECHS and Datang International
The main advantage of trading using opposite THORNEY TECHS and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if THORNEY TECHS 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.| THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc | THORNEY TECHS vs. Apple Inc |
| Datang International vs. THORNEY TECHS LTD | Datang International vs. AAC TECHNOLOGHLDGADR | Datang International vs. SIMS METAL MGT | Datang International vs. Playtech plc |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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