Correlation Between Nanxing Furniture and Guangzhou Shangpin
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By analyzing existing cross correlation between Nanxing Furniture Machinery and Guangzhou Shangpin Home, you can compare the effects of market volatilities on Nanxing Furniture and Guangzhou Shangpin 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 Nanxing Furniture with a short position of Guangzhou Shangpin. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanxing Furniture and Guangzhou Shangpin.
Diversification Opportunities for Nanxing Furniture and Guangzhou Shangpin
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nanxing and Guangzhou is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nanxing Furniture Machinery and Guangzhou Shangpin Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Shangpin Home and Nanxing Furniture 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 Nanxing Furniture Machinery are associated (or correlated) with Guangzhou Shangpin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Shangpin Home has no effect on the direction of Nanxing Furniture i.e., Nanxing Furniture and Guangzhou Shangpin go up and down completely randomly.
Pair Corralation between Nanxing Furniture and Guangzhou Shangpin
Assuming the 90 days trading horizon Nanxing Furniture Machinery is expected to generate 2.31 times more return on investment than Guangzhou Shangpin. However, Nanxing Furniture is 2.31 times more volatile than Guangzhou Shangpin Home. It trades about 0.12 of its potential returns per unit of risk. Guangzhou Shangpin Home is currently generating about -0.02 per unit of risk. If you would invest 1,410 in Nanxing Furniture Machinery on August 27, 2024 and sell it today you would earn a total of 175.00 from holding Nanxing Furniture Machinery or generate 12.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nanxing Furniture Machinery vs. Guangzhou Shangpin Home
Performance |
| Timeline |
| Nanxing Furniture |
| Guangzhou Shangpin Home |
Nanxing Furniture and Guangzhou Shangpin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanxing Furniture and Guangzhou Shangpin
The main advantage of trading using opposite Nanxing Furniture and Guangzhou Shangpin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanxing Furniture position performs unexpectedly, Guangzhou Shangpin 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 Guangzhou Shangpin will offset losses from the drop in Guangzhou Shangpin's long position.| Nanxing Furniture vs. Biwin Storage Technology | Nanxing Furniture vs. PetroChina Co Ltd | Nanxing Furniture vs. Industrial and Commercial | Nanxing Furniture vs. China Construction Bank |
| Guangzhou Shangpin vs. China Petroleum Chemical | Guangzhou Shangpin vs. PetroChina Co Ltd | Guangzhou Shangpin vs. China State Construction | Guangzhou Shangpin vs. China Railway Group |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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