Correlation Between UNITED UTILITIES and China Datang
Can any of the company-specific risk be diversified away by investing in both UNITED UTILITIES and China Datang 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 UNITED UTILITIES and China Datang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITED UTILITIES GR and China Datang, you can compare the effects of market volatilities on UNITED UTILITIES and China Datang 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 UNITED UTILITIES with a short position of China Datang. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITED UTILITIES and China Datang.
Diversification Opportunities for UNITED UTILITIES and China Datang
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UNITED and China is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding UNITED UTILITIES GR and China Datang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Datang and UNITED UTILITIES 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 UNITED UTILITIES GR are associated (or correlated) with China Datang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Datang has no effect on the direction of UNITED UTILITIES i.e., UNITED UTILITIES and China Datang go up and down completely randomly.
Pair Corralation between UNITED UTILITIES and China Datang
Assuming the 90 days trading horizon UNITED UTILITIES GR is expected to under-perform the China Datang. But the stock apears to be less risky and, when comparing its historical volatility, UNITED UTILITIES GR is 1.33 times less risky than China Datang. The stock trades about -0.23 of its potential returns per unit of risk. The China Datang is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 23.00 in China Datang on October 30, 2024 and sell it today you would earn a total of 2.00 from holding China Datang or generate 8.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITED UTILITIES GR vs. China Datang
Performance |
| Timeline |
| UNITED UTILITIES |
| China Datang |
UNITED UTILITIES and China Datang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITED UTILITIES and China Datang
The main advantage of trading using opposite UNITED UTILITIES and China Datang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITED UTILITIES position performs unexpectedly, China Datang 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 China Datang will offset losses from the drop in China Datang's long position.| UNITED UTILITIES vs. WILLIS LEASE FIN | UNITED UTILITIES vs. Global Ship Lease | UNITED UTILITIES vs. CNVISION MEDIA | UNITED UTILITIES vs. Fuji Media Holdings |
| China Datang vs. Broadridge Financial Solutions | China Datang vs. COPLAND ROAD CAPITAL | China Datang vs. CanSino Biologics | China Datang vs. SAN MIGUEL BREWERY |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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