Correlation Between Ningbo Kangqiang and Zhengping RoadBridge
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By analyzing existing cross correlation between Ningbo Kangqiang Electronics and Zhengping RoadBridge Constr, you can compare the effects of market volatilities on Ningbo Kangqiang and Zhengping RoadBridge 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 Zhengping RoadBridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Kangqiang and Zhengping RoadBridge.
Diversification Opportunities for Ningbo Kangqiang and Zhengping RoadBridge
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Ningbo and Zhengping is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Kangqiang Electronics and Zhengping RoadBridge Constr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhengping RoadBridge 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 Zhengping RoadBridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhengping RoadBridge has no effect on the direction of Ningbo Kangqiang i.e., Ningbo Kangqiang and Zhengping RoadBridge go up and down completely randomly.
Pair Corralation between Ningbo Kangqiang and Zhengping RoadBridge
Assuming the 90 days trading horizon Ningbo Kangqiang Electronics is expected to generate 1.62 times more return on investment than Zhengping RoadBridge. However, Ningbo Kangqiang is 1.62 times more volatile than Zhengping RoadBridge Constr. It trades about 0.11 of its potential returns per unit of risk. Zhengping RoadBridge Constr is currently generating about -0.13 per unit of risk. If you would invest 1,770 in Ningbo Kangqiang Electronics on November 8, 2024 and sell it today you would earn a total of 130.00 from holding Ningbo Kangqiang Electronics or generate 7.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ningbo Kangqiang Electronics vs. Zhengping RoadBridge Constr
Performance |
| Timeline |
| Ningbo Kangqiang Ele |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Zhengping RoadBridge |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Ningbo Kangqiang and Zhengping RoadBridge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningbo Kangqiang and Zhengping RoadBridge
The main advantage of trading using opposite Ningbo Kangqiang and Zhengping RoadBridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo Kangqiang position performs unexpectedly, Zhengping RoadBridge 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 Zhengping RoadBridge will offset losses from the drop in Zhengping RoadBridge's long position.The idea behind Ningbo Kangqiang Electronics and Zhengping RoadBridge Constr 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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