Correlation Between New China and Dirui Industrial
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By analyzing existing cross correlation between New China Life and Dirui Industrial Co, you can compare the effects of market volatilities on New China 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 New China with a short position of Dirui Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of New China and Dirui Industrial.
Diversification Opportunities for New China and Dirui Industrial
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and Dirui is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding New China Life and Dirui Industrial Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dirui Industrial and New 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 New China Life 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 New China i.e., New China and Dirui Industrial go up and down completely randomly.
Pair Corralation between New China and Dirui Industrial
Assuming the 90 days trading horizon New China is expected to generate 1.16 times less return on investment than Dirui Industrial. In addition to that, New China is 1.06 times more volatile than Dirui Industrial Co. It trades about 0.23 of its total potential returns per unit of risk. Dirui Industrial Co is currently generating about 0.29 per unit of volatility. If you would invest 1,598 in Dirui Industrial Co on September 26, 2024 and sell it today you would earn a total of 220.00 from holding Dirui Industrial Co or generate 13.77% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
New China Life vs. Dirui Industrial Co
Performance |
Timeline |
New China Life |
Dirui Industrial |
New China and Dirui Industrial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with New China and Dirui Industrial
The main advantage of trading using opposite New China and Dirui Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New China 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.New China vs. Kweichow Moutai Co | New China vs. Shenzhen Mindray Bio Medical | New China vs. Jiangsu Pacific Quartz | New China vs. G bits Network Technology |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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