Correlation Between Nanxing Furniture and Inner Mongolia
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By analyzing existing cross correlation between Nanxing Furniture Machinery and Inner Mongolia BaoTou, you can compare the effects of market volatilities on Nanxing Furniture and Inner Mongolia 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 Inner Mongolia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanxing Furniture and Inner Mongolia.
Diversification Opportunities for Nanxing Furniture and Inner Mongolia
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nanxing and Inner is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nanxing Furniture Machinery and Inner Mongolia BaoTou in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inner Mongolia BaoTou 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 Inner Mongolia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inner Mongolia BaoTou has no effect on the direction of Nanxing Furniture i.e., Nanxing Furniture and Inner Mongolia go up and down completely randomly.
Pair Corralation between Nanxing Furniture and Inner Mongolia
Assuming the 90 days trading horizon Nanxing Furniture Machinery is expected to generate 4.05 times more return on investment than Inner Mongolia. However, Nanxing Furniture is 4.05 times more volatile than Inner Mongolia BaoTou. It trades about 0.3 of its potential returns per unit of risk. Inner Mongolia BaoTou is currently generating about -0.05 per unit of risk. If you would invest 1,385 in Nanxing Furniture Machinery on November 7, 2024 and sell it today you would earn a total of 364.00 from holding Nanxing Furniture Machinery or generate 26.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nanxing Furniture Machinery vs. Inner Mongolia BaoTou
Performance |
| Timeline |
| Nanxing Furniture |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Inner Mongolia BaoTou |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nanxing Furniture and Inner Mongolia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanxing Furniture and Inner Mongolia
The main advantage of trading using opposite Nanxing Furniture and Inner Mongolia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanxing Furniture position performs unexpectedly, Inner Mongolia 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 Inner Mongolia will offset losses from the drop in Inner Mongolia's long position.The idea behind Nanxing Furniture Machinery and Inner Mongolia BaoTou 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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