Correlation Between Dingli Communications and Huayi Brothers

Can any of the company-specific risk be diversified away by investing in both Dingli Communications and Huayi Brothers 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 Dingli Communications and Huayi Brothers into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dingli Communications Corp and Huayi Brothers Media, you can compare the effects of market volatilities on Dingli Communications and Huayi Brothers 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 Dingli Communications with a short position of Huayi Brothers. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dingli Communications and Huayi Brothers.

Diversification Opportunities for Dingli Communications and Huayi Brothers

0.75

Correlation Coefficient

Dingli Communications  Huayi Brothers

Poor diversification

The 3 months correlation between Dingli and Huayi is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Dingli Communications Corp and Huayi Brothers Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huayi Brothers Media and Dingli Communications 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 Dingli Communications Corp are associated (or correlated) with Huayi Brothers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huayi Brothers Media has no effect on the direction of Dingli Communications i.e., Dingli Communications and Huayi Brothers go up and down completely randomly.

Pair Corralation between Dingli Communications and Huayi Brothers

Assuming the 90 days trading horizon Dingli Communications is expected to generate 1.25 times less return on investment than Huayi Brothers. But when comparing it to its historical volatility, Dingli Communications Corp is 1.12 times less risky than Huayi Brothers. It trades about 0.1 of its potential returns per unit of risk. Huayi Brothers Media is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  241.00  in Huayi Brothers Media on April 25, 2025 and sell it today you would earn a total of  32.00  from holding Huayi Brothers Media or generate 13.28% return on investment over 90 days.

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

Dingli Communications Corp  vs.  Huayi Brothers Media

Dingli Communications

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dingli Communications Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Dingli Communications may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Huayi Brothers Media

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Huayi Brothers Media are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Huayi Brothers sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dingli Communications and Huayi Brothers

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

The idea behind Dingli Communications Corp and Huayi Brothers Media 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.