Correlation Between Ningbo Kangqiang and Fujian Longzhou
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By analyzing existing cross correlation between Ningbo Kangqiang Electronics and Fujian Longzhou Transportation, you can compare the effects of market volatilities on Ningbo Kangqiang and Fujian Longzhou 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 Ningbo Kangqiang with a short position of Fujian Longzhou. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Kangqiang and Fujian Longzhou.
Diversification Opportunities for Ningbo Kangqiang and Fujian Longzhou
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ningbo and Fujian is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Kangqiang Electronics and Fujian Longzhou Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Longzhou Tran and Ningbo Kangqiang 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 Ningbo Kangqiang Electronics are associated (or correlated) with Fujian Longzhou. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Longzhou Tran has no effect on the direction of Ningbo Kangqiang i.e., Ningbo Kangqiang and Fujian Longzhou go up and down completely randomly.
Pair Corralation between Ningbo Kangqiang and Fujian Longzhou
Assuming the 90 days trading horizon Ningbo Kangqiang Electronics is expected to generate 0.99 times more return on investment than Fujian Longzhou. However, Ningbo Kangqiang Electronics is 1.01 times less risky than Fujian Longzhou. It trades about 0.1 of its potential returns per unit of risk. Fujian Longzhou Transportation is currently generating about 0.03 per unit of risk. If you would invest 960.00 in Ningbo Kangqiang Electronics on November 8, 2024 and sell it today you would earn a total of 940.00 from holding Ningbo Kangqiang Electronics or generate 97.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ningbo Kangqiang Electronics vs. Fujian Longzhou Transportation
Performance |
| Timeline |
| Ningbo Kangqiang Ele |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Fujian Longzhou Tran |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ningbo Kangqiang and Fujian Longzhou Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningbo Kangqiang and Fujian Longzhou
The main advantage of trading using opposite Ningbo Kangqiang and Fujian Longzhou positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo Kangqiang position performs unexpectedly, Fujian Longzhou 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 Fujian Longzhou will offset losses from the drop in Fujian Longzhou's long position.The idea behind Ningbo Kangqiang Electronics and Fujian Longzhou Transportation 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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