Correlation Between Dorman Products and China Automotive
Can any of the company-specific risk be diversified away by investing in both Dorman Products and China Automotive 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 Dorman Products and China Automotive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dorman Products and China Automotive Systems, you can compare the effects of market volatilities on Dorman Products and China Automotive 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 Dorman Products with a short position of China Automotive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dorman Products and China Automotive.
Diversification Opportunities for Dorman Products and China Automotive
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Dorman and China is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Dorman Products and China Automotive Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Automotive Systems and Dorman Products 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 Dorman Products are associated (or correlated) with China Automotive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Automotive Systems has no effect on the direction of Dorman Products i.e., Dorman Products and China Automotive go up and down completely randomly.
Pair Corralation between Dorman Products and China Automotive
Given the investment horizon of 90 days Dorman Products is expected to generate 0.93 times more return on investment than China Automotive. However, Dorman Products is 1.07 times less risky than China Automotive. It trades about 0.05 of its potential returns per unit of risk. China Automotive Systems is currently generating about -0.01 per unit of risk. If you would invest 8,480 in Dorman Products on January 25, 2024 and sell it today you would earn a total of 542.00 from holding Dorman Products or generate 6.39% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Dorman Products vs. China Automotive Systems
Performance |
Timeline |
Dorman Products |
China Automotive Systems |
Dorman Products and China Automotive Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Dorman Products and China Automotive
The main advantage of trading using opposite Dorman Products and China Automotive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dorman Products position performs unexpectedly, China Automotive 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 Automotive will offset losses from the drop in China Automotive's long position.Dorman Products vs. Fox Factory Holding | Dorman Products vs. Douglas Dynamics | Dorman Products vs. Monro Muffler Brake |
China Automotive vs. Fox Factory Holding | China Automotive vs. Douglas Dynamics | China Automotive vs. Monro Muffler Brake |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
Other Complementary Tools
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences | |
AI Investment Finder Use AI to screen and filter profitable investment opportunities | |
Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
Technical Analysis Check basic technical indicators and analysis based on most latest market data |