Correlation Between Datang International and Sch Environnement

Can any of the company-specific risk be diversified away by investing in both Datang International and Sch Environnement 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 Datang International and Sch Environnement into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Datang International Power and Sch Environnement SA, you can compare the effects of market volatilities on Datang International and Sch Environnement 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 Datang International with a short position of Sch Environnement. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang International and Sch Environnement.

Diversification Opportunities for Datang International and Sch Environnement

0.73

Correlation Coefficient

Datang International  Sch Environnement

Poor diversification

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

Pair Corralation between Datang International and Sch Environnement

Assuming the 90 days horizon Datang International is expected to generate 1.05 times less return on investment than Sch Environnement. In addition to that, Datang International is 1.24 times more volatile than Sch Environnement SA. It trades about 0.13 of its total potential returns per unit of risk. Sch Environnement SA is currently generating about 0.17 per unit of volatility. If you would invest  7,758  in Sch Environnement SA on April 24, 2025 and sell it today you would earn a total of  2,442  from holding Sch Environnement SA or generate 31.48% return on investment over 90 days.

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

Datang International Power  vs.  Sch Environnement SA

Datang International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Datang International Power are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Datang International reported solid returns over the last few months and may actually be approaching a breakup point.

Sch Environnement

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sch Environnement SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Sch Environnement reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Datang International and Sch Environnement

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

The idea behind Datang International Power and Sch Environnement SA 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.