Correlation Between Nanxing Furniture and Aofu Environmental
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By analyzing existing cross correlation between Nanxing Furniture Machinery and Aofu Environmental Technology, you can compare the effects of market volatilities on Nanxing Furniture and Aofu Environmental 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 Aofu Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanxing Furniture and Aofu Environmental.
Diversification Opportunities for Nanxing Furniture and Aofu Environmental
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nanxing and Aofu is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Nanxing Furniture Machinery and Aofu Environmental Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aofu Environmental 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 Aofu Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aofu Environmental has no effect on the direction of Nanxing Furniture i.e., Nanxing Furniture and Aofu Environmental go up and down completely randomly.
Pair Corralation between Nanxing Furniture and Aofu Environmental
Assuming the 90 days trading horizon Nanxing Furniture Machinery is expected to generate 1.84 times more return on investment than Aofu Environmental. However, Nanxing Furniture is 1.84 times more volatile than Aofu Environmental Technology. It trades about 0.1 of its potential returns per unit of risk. Aofu Environmental Technology is currently generating about -0.11 per unit of risk. If you would invest 1,568 in Nanxing Furniture Machinery on October 27, 2024 and sell it today you would earn a total of 127.00 from holding Nanxing Furniture Machinery or generate 8.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nanxing Furniture Machinery vs. Aofu Environmental Technology
Performance |
| Timeline |
| Nanxing Furniture |
| Aofu Environmental |
Nanxing Furniture and Aofu Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanxing Furniture and Aofu Environmental
The main advantage of trading using opposite Nanxing Furniture and Aofu Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanxing Furniture position performs unexpectedly, Aofu Environmental 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 Aofu Environmental will offset losses from the drop in Aofu Environmental's long position.| Nanxing Furniture vs. Xinxiang Chemical Fiber | Nanxing Furniture vs. Xilong Chemical Co | Nanxing Furniture vs. Hengli Industrial Development | Nanxing Furniture vs. Guizhou Chanhen Chemical |
| Aofu Environmental vs. Miracll Chemicals Co | Aofu Environmental vs. CICT Mobile Communication | Aofu Environmental vs. Railway Signal Communication | Aofu Environmental vs. Eastern Communications Co |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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