Correlation Between Ningbo Kangqiang and Guilin Seamild
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By analyzing existing cross correlation between Ningbo Kangqiang Electronics and Guilin Seamild Foods, you can compare the effects of market volatilities on Ningbo Kangqiang and Guilin Seamild 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 Guilin Seamild. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Kangqiang and Guilin Seamild.
Diversification Opportunities for Ningbo Kangqiang and Guilin Seamild
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ningbo and Guilin is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Kangqiang Electronics and Guilin Seamild Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guilin Seamild Foods 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 Guilin Seamild. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guilin Seamild Foods has no effect on the direction of Ningbo Kangqiang i.e., Ningbo Kangqiang and Guilin Seamild go up and down completely randomly.
Pair Corralation between Ningbo Kangqiang and Guilin Seamild
Assuming the 90 days trading horizon Ningbo Kangqiang Electronics is expected to generate 1.33 times more return on investment than Guilin Seamild. However, Ningbo Kangqiang is 1.33 times more volatile than Guilin Seamild Foods. It trades about 0.04 of its potential returns per unit of risk. Guilin Seamild Foods is currently generating about 0.02 per unit of risk. If you would invest 1,275 in Ningbo Kangqiang Electronics on November 7, 2024 and sell it today you would earn a total of 438.00 from holding Ningbo Kangqiang Electronics or generate 34.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ningbo Kangqiang Electronics vs. Guilin Seamild Foods
Performance |
| Timeline |
| Ningbo Kangqiang Ele |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Guilin Seamild Foods |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Ningbo Kangqiang and Guilin Seamild Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningbo Kangqiang and Guilin Seamild
The main advantage of trading using opposite Ningbo Kangqiang and Guilin Seamild positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo Kangqiang position performs unexpectedly, Guilin Seamild 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 Guilin Seamild will offset losses from the drop in Guilin Seamild's long position.The idea behind Ningbo Kangqiang Electronics and Guilin Seamild Foods 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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