Correlation Between Innovative Medical and Ningxia Younglight
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By analyzing existing cross correlation between Innovative Medical Management and Ningxia Younglight Chemicals, you can compare the effects of market volatilities on Innovative Medical and Ningxia Younglight 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 Innovative Medical with a short position of Ningxia Younglight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Innovative Medical and Ningxia Younglight.
Diversification Opportunities for Innovative Medical and Ningxia Younglight
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Innovative and Ningxia is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Innovative Medical Management and Ningxia Younglight Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningxia Younglight and Innovative Medical 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 Innovative Medical Management are associated (or correlated) with Ningxia Younglight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningxia Younglight has no effect on the direction of Innovative Medical i.e., Innovative Medical and Ningxia Younglight go up and down completely randomly.
Pair Corralation between Innovative Medical and Ningxia Younglight
Assuming the 90 days trading horizon Innovative Medical Management is expected to generate 1.3 times more return on investment than Ningxia Younglight. However, Innovative Medical is 1.3 times more volatile than Ningxia Younglight Chemicals. It trades about -0.03 of its potential returns per unit of risk. Ningxia Younglight Chemicals is currently generating about -0.11 per unit of risk. If you would invest 977.00 in Innovative Medical Management on October 11, 2024 and sell it today you would lose (65.00) from holding Innovative Medical Management or give up 6.65% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Innovative Medical Management vs. Ningxia Younglight Chemicals
Performance |
| Timeline |
| Innovative Medical |
| Ningxia Younglight |
Innovative Medical and Ningxia Younglight Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Innovative Medical and Ningxia Younglight
The main advantage of trading using opposite Innovative Medical and Ningxia Younglight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Innovative Medical position performs unexpectedly, Ningxia Younglight 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 Ningxia Younglight will offset losses from the drop in Ningxia Younglight's long position.The idea behind Innovative Medical Management and Ningxia Younglight Chemicals 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.
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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