Correlation Between REGAL ASIAN and Datang International

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Can any of the company-specific risk be diversified away by investing in both REGAL ASIAN and Datang International 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 REGAL ASIAN and Datang International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REGAL ASIAN INVESTMENTS and Datang International Power, you can compare the effects of market volatilities on REGAL ASIAN and Datang International 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 REGAL ASIAN with a short position of Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL ASIAN and Datang International.

Diversification Opportunities for REGAL ASIAN and Datang International

0.73
  Correlation Coefficient

Poor diversification

The 3 months correlation between REGAL and Datang is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International and REGAL ASIAN 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 REGAL ASIAN INVESTMENTS are associated (or correlated) with Datang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datang International has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and Datang International go up and down completely randomly.

Pair Corralation between REGAL ASIAN and Datang International

Assuming the 90 days trading horizon REGAL ASIAN is expected to generate 1.06 times less return on investment than Datang International. But when comparing it to its historical volatility, REGAL ASIAN INVESTMENTS is 2.06 times less risky than Datang International. It trades about 0.21 of its potential returns per unit of risk. Datang International Power is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  17.00  in Datang International Power on April 20, 2025 and sell it today you would earn a total of  4.00  from holding Datang International Power or generate 23.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

REGAL ASIAN INVESTMENTS  vs.  Datang International Power

 Performance 
       Timeline  
REGAL ASIAN INVESTMENTS 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in REGAL ASIAN INVESTMENTS are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, REGAL ASIAN reported solid returns over the last few months and may actually be approaching a breakup point.
Datang International 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Datang International Power are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Datang International reported solid returns over the last few months and may actually be approaching a breakup point.

REGAL ASIAN and Datang International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with REGAL ASIAN and Datang International

The main advantage of trading using opposite REGAL ASIAN and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGAL ASIAN position performs unexpectedly, Datang International 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 International will offset losses from the drop in Datang International's long position.
The idea behind REGAL ASIAN INVESTMENTS and Datang International Power 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.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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