Correlation Between Shenzhen Clou and Ningbo Kangqiang
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By analyzing existing cross correlation between Shenzhen Clou Electronics and Ningbo Kangqiang Electronics, you can compare the effects of market volatilities on Shenzhen Clou and Ningbo Kangqiang 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 Shenzhen Clou with a short position of Ningbo Kangqiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Clou and Ningbo Kangqiang.
Diversification Opportunities for Shenzhen Clou and Ningbo Kangqiang
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Shenzhen and Ningbo is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Clou Electronics and Ningbo Kangqiang Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Kangqiang Ele and Shenzhen Clou 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 Shenzhen Clou Electronics are associated (or correlated) with Ningbo Kangqiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Kangqiang Ele has no effect on the direction of Shenzhen Clou i.e., Shenzhen Clou and Ningbo Kangqiang go up and down completely randomly.
Pair Corralation between Shenzhen Clou and Ningbo Kangqiang
Assuming the 90 days trading horizon Shenzhen Clou Electronics is expected to under-perform the Ningbo Kangqiang. But the stock apears to be less risky and, when comparing its historical volatility, Shenzhen Clou Electronics is 2.38 times less risky than Ningbo Kangqiang. The stock trades about -0.01 of its potential returns per unit of risk. The Ningbo Kangqiang Electronics is currently generating about 0.11 of returns per unit of risk over similar time horizon. 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 Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenzhen Clou Electronics vs. Ningbo Kangqiang Electronics
Performance |
| Timeline |
| Shenzhen Clou Electronics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ningbo Kangqiang Ele |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Shenzhen Clou and Ningbo Kangqiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Clou and Ningbo Kangqiang
The main advantage of trading using opposite Shenzhen Clou and Ningbo Kangqiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Clou position performs unexpectedly, Ningbo Kangqiang 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 Ningbo Kangqiang will offset losses from the drop in Ningbo Kangqiang's long position.The idea behind Shenzhen Clou Electronics and Ningbo Kangqiang Electronics 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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