Correlation Between Nanjing Putian and Rongsheng Petrochemical
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By analyzing existing cross correlation between Nanjing Putian Telecommunications and Rongsheng Petrochemical Co, you can compare the effects of market volatilities on Nanjing Putian and Rongsheng Petrochemical 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 Nanjing Putian with a short position of Rongsheng Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanjing Putian and Rongsheng Petrochemical.
Diversification Opportunities for Nanjing Putian and Rongsheng Petrochemical
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nanjing and Rongsheng is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Putian Telecommunicati and Rongsheng Petrochemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rongsheng Petrochemical and Nanjing Putian 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 Nanjing Putian Telecommunications are associated (or correlated) with Rongsheng Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rongsheng Petrochemical has no effect on the direction of Nanjing Putian i.e., Nanjing Putian and Rongsheng Petrochemical go up and down completely randomly.
Pair Corralation between Nanjing Putian and Rongsheng Petrochemical
Assuming the 90 days trading horizon Nanjing Putian Telecommunications is expected to generate 3.33 times more return on investment than Rongsheng Petrochemical. However, Nanjing Putian is 3.33 times more volatile than Rongsheng Petrochemical Co. It trades about -0.01 of its potential returns per unit of risk. Rongsheng Petrochemical Co is currently generating about -0.08 per unit of risk. If you would invest 403.00 in Nanjing Putian Telecommunications on October 20, 2024 and sell it today you would lose (12.00) from holding Nanjing Putian Telecommunications or give up 2.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nanjing Putian Telecommunicati vs. Rongsheng Petrochemical Co
Performance |
| Timeline |
| Nanjing Putian Telec |
| Rongsheng Petrochemical |
Nanjing Putian and Rongsheng Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanjing Putian and Rongsheng Petrochemical
The main advantage of trading using opposite Nanjing Putian and Rongsheng Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanjing Putian position performs unexpectedly, Rongsheng Petrochemical 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 Rongsheng Petrochemical will offset losses from the drop in Rongsheng Petrochemical's long position.| Nanjing Putian vs. Kangping Technology Co | Nanjing Putian vs. XiaMen HongXin Electron tech | Nanjing Putian vs. Guangzhou Haige Communications | Nanjing Putian vs. Holitech Technology 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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