Correlation Between Trade Van and CHINA DEVELOPMENT

Can any of the company-specific risk be diversified away by investing in both Trade Van and CHINA DEVELOPMENT 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 Trade Van and CHINA DEVELOPMENT into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Trade Van Information Services and CHINA DEVELOPMENT FINANCIAL, you can compare the effects of market volatilities on Trade Van and CHINA DEVELOPMENT 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 Trade Van with a short position of CHINA DEVELOPMENT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trade Van and CHINA DEVELOPMENT.

Diversification Opportunities for Trade Van and CHINA DEVELOPMENT

0.82

Correlation Coefficient

Trade Van  CHINA DEVELOPMENT

Very poor diversification

The 3 months correlation between Trade and CHINA is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Trade Van Information Services and CHINA DEVELOPMENT FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA DEVELOPMENT and Trade Van 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 Trade Van Information Services are associated (or correlated) with CHINA DEVELOPMENT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA DEVELOPMENT has no effect on the direction of Trade Van i.e., Trade Van and CHINA DEVELOPMENT go up and down completely randomly.

Pair Corralation between Trade Van and CHINA DEVELOPMENT

Assuming the 90 days trading horizon Trade Van Information Services is expected to generate 2.34 times more return on investment than CHINA DEVELOPMENT. However, Trade Van is 2.34 times more volatile than CHINA DEVELOPMENT FINANCIAL. It trades about 0.19 of its potential returns per unit of risk. CHINA DEVELOPMENT FINANCIAL is currently generating about 0.17 per unit of risk. If you would invest  7,710  in Trade Van Information Services on September 27, 2024 and sell it today you would earn a total of  990.00  from holding Trade Van Information Services or generate 12.84% return on investment over 90 days.

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

Trade Van Information Services  vs.  CHINA DEVELOPMENT FINANCIAL

Trade Van Information

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Trade Van Information Services are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Trade Van may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CHINA DEVELOPMENT

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CHINA DEVELOPMENT FINANCIAL are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, CHINA DEVELOPMENT is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Trade Van and CHINA DEVELOPMENT

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

The idea behind Trade Van Information Services and CHINA DEVELOPMENT FINANCIAL 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 Transaction History module to view history of all your transactions and understand their impact on performance.