Correlation Between Tongling Nonferrous and Beijing Watertek
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By analyzing existing cross correlation between Tongling Nonferrous Metals and Beijing Watertek Information, you can compare the effects of market volatilities on Tongling Nonferrous and Beijing Watertek 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 Beijing Watertek. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tongling Nonferrous and Beijing Watertek.
Diversification Opportunities for Tongling Nonferrous and Beijing Watertek
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tongling and Beijing is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Tongling Nonferrous Metals and Beijing Watertek Information in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Watertek Inf 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 Beijing Watertek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Watertek Inf has no effect on the direction of Tongling Nonferrous i.e., Tongling Nonferrous and Beijing Watertek go up and down completely randomly.
Pair Corralation between Tongling Nonferrous and Beijing Watertek
Assuming the 90 days trading horizon Tongling Nonferrous is expected to generate 5.67 times less return on investment than Beijing Watertek. But when comparing it to its historical volatility, Tongling Nonferrous Metals is 2.56 times less risky than Beijing Watertek. It trades about 0.07 of its potential returns per unit of risk. Beijing Watertek Information is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 309.00 in Beijing Watertek Information on November 7, 2024 and sell it today you would earn a total of 22.00 from holding Beijing Watertek Information or generate 7.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tongling Nonferrous Metals vs. Beijing Watertek Information
Performance |
| Timeline |
| Tongling Nonferrous |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Beijing Watertek Inf |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Tongling Nonferrous and Beijing Watertek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tongling Nonferrous and Beijing Watertek
The main advantage of trading using opposite Tongling Nonferrous and Beijing Watertek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tongling Nonferrous position performs unexpectedly, Beijing Watertek 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 Beijing Watertek will offset losses from the drop in Beijing Watertek's long position.The idea behind Tongling Nonferrous Metals and Beijing Watertek Information 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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