Correlation Between Ningxia Younglight and Zhongshan Public
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By analyzing existing cross correlation between Ningxia Younglight Chemicals and Zhongshan Public Utilities, you can compare the effects of market volatilities on Ningxia Younglight and Zhongshan Public 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 Ningxia Younglight with a short position of Zhongshan Public. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningxia Younglight and Zhongshan Public.
Diversification Opportunities for Ningxia Younglight and Zhongshan Public
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ningxia and Zhongshan is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Ningxia Younglight Chemicals and Zhongshan Public Utilities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhongshan Public Uti and Ningxia Younglight 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 Ningxia Younglight Chemicals are associated (or correlated) with Zhongshan Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhongshan Public Uti has no effect on the direction of Ningxia Younglight i.e., Ningxia Younglight and Zhongshan Public go up and down completely randomly.
Pair Corralation between Ningxia Younglight and Zhongshan Public
Assuming the 90 days trading horizon Ningxia Younglight is expected to generate 1.8 times less return on investment than Zhongshan Public. In addition to that, Ningxia Younglight is 1.52 times more volatile than Zhongshan Public Utilities. It trades about 0.05 of its total potential returns per unit of risk. Zhongshan Public Utilities is currently generating about 0.14 per unit of volatility. If you would invest 855.00 in Zhongshan Public Utilities on November 7, 2024 and sell it today you would earn a total of 24.00 from holding Zhongshan Public Utilities or generate 2.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ningxia Younglight Chemicals vs. Zhongshan Public Utilities
Performance |
| Timeline |
| Ningxia Younglight |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Zhongshan Public Uti |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ningxia Younglight and Zhongshan Public Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningxia Younglight and Zhongshan Public
The main advantage of trading using opposite Ningxia Younglight and Zhongshan Public positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningxia Younglight position performs unexpectedly, Zhongshan Public 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 Zhongshan Public will offset losses from the drop in Zhongshan Public's long position.The idea behind Ningxia Younglight Chemicals and Zhongshan Public Utilities 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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