Correlation Between PARKEN Sport and DATANG INTL

Can any of the company-specific risk be diversified away by investing in both PARKEN Sport and DATANG INTL 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 PARKEN Sport and DATANG INTL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PARKEN Sport Entertainment and DATANG INTL POW, you can compare the effects of market volatilities on PARKEN Sport and DATANG INTL 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 PARKEN Sport with a short position of DATANG INTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of PARKEN Sport and DATANG INTL.

Diversification Opportunities for PARKEN Sport and DATANG INTL

0.01

Correlation Coefficient

PARKEN Sport  DATANG INTL

Significant diversification

The 3 months correlation between PARKEN and DATANG is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding PARKEN Sport Entertainment and DATANG INTL POW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATANG INTL POW and PARKEN Sport 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 PARKEN Sport Entertainment are associated (or correlated) with DATANG INTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATANG INTL POW has no effect on the direction of PARKEN Sport i.e., PARKEN Sport and DATANG INTL go up and down completely randomly.

Pair Corralation between PARKEN Sport and DATANG INTL

Assuming the 90 days horizon PARKEN Sport Entertainment is expected to generate 0.67 times more return on investment than DATANG INTL. However, PARKEN Sport Entertainment is 1.49 times less risky than DATANG INTL. It trades about 0.08 of its potential returns per unit of risk. DATANG INTL POW is currently generating about 0.02 per unit of risk. If you would invest  1,510  in PARKEN Sport Entertainment on September 27, 2024 and sell it today you would earn a total of  170.00  from holding PARKEN Sport Entertainment or generate 11.26% return on investment over 90 days.

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

PARKEN Sport Entertainment  vs.  DATANG INTL POW

PARKEN Sport Enterta

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PARKEN Sport Entertainment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, PARKEN Sport reported solid returns over the last few months and may actually be approaching a breakup point.

DATANG INTL POW

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DATANG INTL POW are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, DATANG INTL is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PARKEN Sport and DATANG INTL

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

The idea behind PARKEN Sport Entertainment and DATANG INTL POW 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.