Correlation Between Dalian Zeus and Keda Clean

Can any of the company-specific risk be diversified away by investing in both Dalian Zeus and Keda Clean 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 Dalian Zeus and Keda Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dalian Zeus Entertainment and Keda Clean Energy, you can compare the effects of market volatilities on Dalian Zeus and Keda Clean 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 Dalian Zeus with a short position of Keda Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dalian Zeus and Keda Clean.

Diversification Opportunities for Dalian Zeus and Keda Clean

0.73

Correlation Coefficient

Dalian Zeus  Keda Clean

Poor diversification

The 3 months correlation between Dalian and Keda is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Dalian Zeus Entertainment and Keda Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keda Clean Energy and Dalian Zeus 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 Dalian Zeus Entertainment are associated (or correlated) with Keda Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keda Clean Energy has no effect on the direction of Dalian Zeus i.e., Dalian Zeus and Keda Clean go up and down completely randomly.

Pair Corralation between Dalian Zeus and Keda Clean

Assuming the 90 days trading horizon Dalian Zeus Entertainment is expected to generate 1.76 times more return on investment than Keda Clean. However, Dalian Zeus is 1.76 times more volatile than Keda Clean Energy. It trades about 0.38 of its potential returns per unit of risk. Keda Clean Energy is currently generating about 0.11 per unit of risk. If you would invest  261.00  in Dalian Zeus Entertainment on September 12, 2024 and sell it today you would earn a total of  487.00  from holding Dalian Zeus Entertainment or generate 186.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Dalian Zeus Entertainment  vs.  Keda Clean Energy

Dalian Zeus Entertainment

Risk-Adjusted Performance

29 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Dalian Zeus Entertainment are ranked lower than 29 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dalian Zeus sustained solid returns over the last few months and may actually be approaching a breakup point.

Keda Clean Energy

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Keda Clean Energy are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Keda Clean sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dalian Zeus and Keda Clean

The main advantage of trading using opposite Dalian Zeus and Keda Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dalian Zeus position performs unexpectedly, Keda Clean 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 Keda Clean will offset losses from the drop in Keda Clean's long position.

The idea behind Dalian Zeus Entertainment and Keda Clean Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.