Correlation Between Volkswagen and Datang International
Can any of the company-specific risk be diversified away by investing in both Volkswagen 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 Volkswagen and Datang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Volkswagen AG and Datang International Power, you can compare the effects of market volatilities on Volkswagen 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 Volkswagen with a short position of Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Volkswagen and Datang International.
Diversification Opportunities for Volkswagen and Datang International
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Volkswagen and Datang is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Volkswagen AG and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International and Volkswagen 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 Volkswagen AG 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 Volkswagen i.e., Volkswagen and Datang International go up and down completely randomly.
Pair Corralation between Volkswagen and Datang International
Assuming the 90 days trading horizon Volkswagen AG is expected to under-perform the Datang International. But the stock apears to be less risky and, when comparing its historical volatility, Volkswagen AG is 2.03 times less risky than Datang International. The stock trades about -0.42 of its potential returns per unit of risk. The Datang International Power is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 18.00 in Datang International Power on August 25, 2024 and sell it today you would lose (1.00) from holding Datang International Power or give up 5.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Volkswagen AG vs. Datang International Power
Performance |
| Timeline |
| Volkswagen AG |
| Datang International |
Volkswagen and Datang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Volkswagen and Datang International
The main advantage of trading using opposite Volkswagen and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Volkswagen 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.| Volkswagen vs. AVITA Medical | Volkswagen vs. Clearside Biomedical | Volkswagen vs. IMAGIN MEDICAL INC | Volkswagen vs. TSOGO SUN GAMING |
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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