Correlation Between Ningxia Younglight and Leyard Optoelectronic
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By analyzing existing cross correlation between Ningxia Younglight Chemicals and Leyard Optoelectronic, you can compare the effects of market volatilities on Ningxia Younglight and Leyard Optoelectronic 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 Leyard Optoelectronic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningxia Younglight and Leyard Optoelectronic.
Diversification Opportunities for Ningxia Younglight and Leyard Optoelectronic
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ningxia and Leyard is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Ningxia Younglight Chemicals and Leyard Optoelectronic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leyard Optoelectronic 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 Leyard Optoelectronic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leyard Optoelectronic has no effect on the direction of Ningxia Younglight i.e., Ningxia Younglight and Leyard Optoelectronic go up and down completely randomly.
Pair Corralation between Ningxia Younglight and Leyard Optoelectronic
Assuming the 90 days trading horizon Ningxia Younglight is expected to generate 2.68 times less return on investment than Leyard Optoelectronic. In addition to that, Ningxia Younglight is 1.06 times more volatile than Leyard Optoelectronic. It trades about 0.02 of its total potential returns per unit of risk. Leyard Optoelectronic is currently generating about 0.05 per unit of volatility. If you would invest 622.00 in Leyard Optoelectronic on September 14, 2024 and sell it today you would earn a total of 184.00 from holding Leyard Optoelectronic or generate 29.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.62% |
| Values | Daily Returns |
Ningxia Younglight Chemicals vs. Leyard Optoelectronic
Performance |
| Timeline |
| Ningxia Younglight |
| Leyard Optoelectronic |
Ningxia Younglight and Leyard Optoelectronic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningxia Younglight and Leyard Optoelectronic
The main advantage of trading using opposite Ningxia Younglight and Leyard Optoelectronic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningxia Younglight position performs unexpectedly, Leyard Optoelectronic 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 Leyard Optoelectronic will offset losses from the drop in Leyard Optoelectronic's long position.The idea behind Ningxia Younglight Chemicals and Leyard Optoelectronic 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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