Correlation Between Digital China and Yunnan Chuangxin
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By analyzing existing cross correlation between Digital China Information and Yunnan Chuangxin New, you can compare the effects of market volatilities on Digital China and Yunnan Chuangxin 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 Digital China with a short position of Yunnan Chuangxin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Digital China and Yunnan Chuangxin.
Diversification Opportunities for Digital China and Yunnan Chuangxin
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Digital and Yunnan is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Digital China Information and Yunnan Chuangxin New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunnan Chuangxin New and Digital China 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 Digital China Information are associated (or correlated) with Yunnan Chuangxin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunnan Chuangxin New has no effect on the direction of Digital China i.e., Digital China and Yunnan Chuangxin go up and down completely randomly.
Pair Corralation between Digital China and Yunnan Chuangxin
Assuming the 90 days trading horizon Digital China Information is expected to generate 1.13 times more return on investment than Yunnan Chuangxin. However, Digital China is 1.13 times more volatile than Yunnan Chuangxin New. It trades about 0.17 of its potential returns per unit of risk. Yunnan Chuangxin New is currently generating about 0.15 per unit of risk. If you would invest 867.00 in Digital China Information on September 23, 2024 and sell it today you would earn a total of 451.00 from holding Digital China Information or generate 52.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Digital China Information vs. Yunnan Chuangxin New
Performance |
Timeline |
Digital China Information |
Yunnan Chuangxin New |
Digital China and Yunnan Chuangxin Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Digital China and Yunnan Chuangxin
The main advantage of trading using opposite Digital China and Yunnan Chuangxin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Digital China position performs unexpectedly, Yunnan Chuangxin 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 Yunnan Chuangxin will offset losses from the drop in Yunnan Chuangxin's long position.Digital China vs. Anhui Jianghuai Automobile | Digital China vs. Qumei Furniture Group | Digital China vs. Chongqing Changan Automobile | Digital China vs. AUPU Home Style |
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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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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