Correlation Between Newcapec Electronics and Shanghai Material
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By analyzing existing cross correlation between Newcapec Electronics Co and Shanghai Material Trading, you can compare the effects of market volatilities on Newcapec Electronics and Shanghai Material 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 Newcapec Electronics with a short position of Shanghai Material. Check out your portfolio center. Please also check ongoing floating volatility patterns of Newcapec Electronics and Shanghai Material.
Diversification Opportunities for Newcapec Electronics and Shanghai Material
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Newcapec and Shanghai is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Newcapec Electronics Co and Shanghai Material Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Material Trading and Newcapec Electronics 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 Newcapec Electronics Co are associated (or correlated) with Shanghai Material. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Material Trading has no effect on the direction of Newcapec Electronics i.e., Newcapec Electronics and Shanghai Material go up and down completely randomly.
Pair Corralation between Newcapec Electronics and Shanghai Material
Assuming the 90 days trading horizon Newcapec Electronics Co is expected to generate 2.08 times more return on investment than Shanghai Material. However, Newcapec Electronics is 2.08 times more volatile than Shanghai Material Trading. It trades about 0.25 of its potential returns per unit of risk. Shanghai Material Trading is currently generating about -0.17 per unit of risk. If you would invest 947.00 in Newcapec Electronics Co on November 3, 2024 and sell it today you would earn a total of 180.00 from holding Newcapec Electronics Co or generate 19.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Newcapec Electronics Co vs. Shanghai Material Trading
Performance |
| Timeline |
| Newcapec Electronics |
| Shanghai Material Trading |
Newcapec Electronics and Shanghai Material Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Newcapec Electronics and Shanghai Material
The main advantage of trading using opposite Newcapec Electronics and Shanghai Material positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Newcapec Electronics position performs unexpectedly, Shanghai Material 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 Shanghai Material will offset losses from the drop in Shanghai Material's long position.The idea behind Newcapec Electronics Co and Shanghai Material Trading 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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