Correlation Between Agricultural Bank and Dirui Industrial

Can any of the company-specific risk be diversified away by investing in both Agricultural Bank and Dirui Industrial 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 Agricultural Bank and Dirui Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Agricultural Bank of and Dirui Industrial Co, you can compare the effects of market volatilities on Agricultural Bank and Dirui Industrial 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 Agricultural Bank with a short position of Dirui Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Agricultural Bank and Dirui Industrial.

Diversification Opportunities for Agricultural Bank and Dirui Industrial

0.36

Correlation Coefficient

Agricultural Bank  Dirui Industrial

Weak diversification

The 3 months correlation between Agricultural and Dirui is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Agricultural Bank of and Dirui Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dirui Industrial and Agricultural Bank 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 Agricultural Bank of are associated (or correlated) with Dirui Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dirui Industrial has no effect on the direction of Agricultural Bank i.e., Agricultural Bank and Dirui Industrial go up and down completely randomly.

Pair Corralation between Agricultural Bank and Dirui Industrial

Assuming the 90 days trading horizon Agricultural Bank of is expected to generate 0.4 times more return on investment than Dirui Industrial. However, Agricultural Bank of is 2.51 times less risky than Dirui Industrial. It trades about 0.15 of its potential returns per unit of risk. Dirui Industrial Co is currently generating about -0.07 per unit of risk. If you would invest  476.00  in Agricultural Bank of on October 1, 2024 and sell it today you would earn a total of  55.00  from holding Agricultural Bank of or generate 11.55% return on investment over 90 days.

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

Agricultural Bank of  vs.  Dirui Industrial Co

Agricultural Bank

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agricultural Bank of are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Agricultural Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Dirui Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dirui Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Agricultural Bank and Dirui Industrial

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

The idea behind Agricultural Bank of and Dirui Industrial Co 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.