Correlation Between Ningxia Younglight and Hongrun Construction
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By analyzing existing cross correlation between Ningxia Younglight Chemicals and Hongrun Construction Group, you can compare the effects of market volatilities on Ningxia Younglight and Hongrun Construction 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 Hongrun Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningxia Younglight and Hongrun Construction.
Diversification Opportunities for Ningxia Younglight and Hongrun Construction
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ningxia and Hongrun is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ningxia Younglight Chemicals and Hongrun Construction Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hongrun Construction 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 Hongrun Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hongrun Construction has no effect on the direction of Ningxia Younglight i.e., Ningxia Younglight and Hongrun Construction go up and down completely randomly.
Pair Corralation between Ningxia Younglight and Hongrun Construction
Assuming the 90 days trading horizon Ningxia Younglight Chemicals is expected to under-perform the Hongrun Construction. But the stock apears to be less risky and, when comparing its historical volatility, Ningxia Younglight Chemicals is 1.03 times less risky than Hongrun Construction. The stock trades about -0.18 of its potential returns per unit of risk. The Hongrun Construction Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 470.00 in Hongrun Construction Group on September 14, 2024 and sell it today you would earn a total of 42.00 from holding Hongrun Construction Group or generate 8.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ningxia Younglight Chemicals vs. Hongrun Construction Group
Performance |
| Timeline |
| Ningxia Younglight |
| Hongrun Construction |
Ningxia Younglight and Hongrun Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningxia Younglight and Hongrun Construction
The main advantage of trading using opposite Ningxia Younglight and Hongrun Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningxia Younglight position performs unexpectedly, Hongrun Construction 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 Hongrun Construction will offset losses from the drop in Hongrun Construction's long position.The idea behind Ningxia Younglight Chemicals and Hongrun Construction Group 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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