Correlation Between Ningxia Younglight and China Merchants
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By analyzing existing cross correlation between Ningxia Younglight Chemicals and China Merchants Bank, you can compare the effects of market volatilities on Ningxia Younglight and China Merchants 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 China Merchants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningxia Younglight and China Merchants.
Diversification Opportunities for Ningxia Younglight and China Merchants
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ningxia and China is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Ningxia Younglight Chemicals and China Merchants Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Merchants Bank 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 China Merchants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Merchants Bank has no effect on the direction of Ningxia Younglight i.e., Ningxia Younglight and China Merchants go up and down completely randomly.
Pair Corralation between Ningxia Younglight and China Merchants
Assuming the 90 days trading horizon Ningxia Younglight Chemicals is expected to under-perform the China Merchants. In addition to that, Ningxia Younglight is 4.18 times more volatile than China Merchants Bank. It trades about -0.17 of its total potential returns per unit of risk. China Merchants Bank is currently generating about 0.21 per unit of volatility. If you would invest 3,730 in China Merchants Bank on October 14, 2024 and sell it today you would earn a total of 168.00 from holding China Merchants Bank or generate 4.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ningxia Younglight Chemicals vs. China Merchants Bank
Performance |
| Timeline |
| Ningxia Younglight |
| China Merchants Bank |
Ningxia Younglight and China Merchants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningxia Younglight and China Merchants
The main advantage of trading using opposite Ningxia Younglight and China Merchants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningxia Younglight position performs unexpectedly, China Merchants 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 China Merchants will offset losses from the drop in China Merchants' long position.| Ningxia Younglight vs. Chengdu Spaceon Electronics | Ningxia Younglight vs. China Asset Management | Ningxia Younglight vs. Kingclean Electric Co | Ningxia Younglight vs. Huaxia Fund Management |
| China Merchants vs. Ningxia Younglight Chemicals | China Merchants vs. Xiangtan Electrochemical Scientific | China Merchants vs. Shenyang Chemical Industry | China Merchants vs. Dosilicon Co |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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