Correlation Between Tongling Nonferrous and Xizi Clean
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By analyzing existing cross correlation between Tongling Nonferrous Metals and Xizi Clean Energy, you can compare the effects of market volatilities on Tongling Nonferrous and Xizi Clean 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 Tongling Nonferrous with a short position of Xizi Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongling Nonferrous and Xizi Clean.
Diversification Opportunities for Tongling Nonferrous and Xizi Clean
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Tongling and Xizi is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Tongling Nonferrous Metals and Xizi Clean Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xizi Clean Energy and Tongling Nonferrous 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 Tongling Nonferrous Metals are associated (or correlated) with Xizi Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xizi Clean Energy has no effect on the direction of Tongling Nonferrous i.e., Tongling Nonferrous and Xizi Clean go up and down completely randomly.
Pair Corralation between Tongling Nonferrous and Xizi Clean
Assuming the 90 days trading horizon Tongling Nonferrous Metals is expected to under-perform the Xizi Clean. But the stock apears to be less risky and, when comparing its historical volatility, Tongling Nonferrous Metals is 2.79 times less risky than Xizi Clean. The stock trades about -0.04 of its potential returns per unit of risk. The Xizi Clean Energy is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 1,146 in Xizi Clean Energy on October 28, 2024 and sell it today you would earn a total of 106.00 from holding Xizi Clean Energy or generate 9.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tongling Nonferrous Metals vs. Xizi Clean Energy
Performance |
| Timeline |
| Tongling Nonferrous |
| Xizi Clean Energy |
Tongling Nonferrous and Xizi Clean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tongling Nonferrous and Xizi Clean
The main advantage of trading using opposite Tongling Nonferrous and Xizi Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongling Nonferrous position performs unexpectedly, Xizi Clean 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 Xizi Clean will offset losses from the drop in Xizi Clean's long position.The idea behind Tongling Nonferrous Metals and Xizi Clean Energy 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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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 .
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