Correlation Between Leyard Optoelectronic and Ningbo Kangqiang
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By analyzing existing cross correlation between Leyard Optoelectronic and Ningbo Kangqiang Electronics, you can compare the effects of market volatilities on Leyard Optoelectronic and Ningbo Kangqiang 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 Leyard Optoelectronic with a short position of Ningbo Kangqiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leyard Optoelectronic and Ningbo Kangqiang.
Diversification Opportunities for Leyard Optoelectronic and Ningbo Kangqiang
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Leyard and Ningbo is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Leyard Optoelectronic and Ningbo Kangqiang Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Kangqiang Ele and Leyard Optoelectronic 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 Leyard Optoelectronic are associated (or correlated) with Ningbo Kangqiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Kangqiang Ele has no effect on the direction of Leyard Optoelectronic i.e., Leyard Optoelectronic and Ningbo Kangqiang go up and down completely randomly.
Pair Corralation between Leyard Optoelectronic and Ningbo Kangqiang
Assuming the 90 days trading horizon Leyard Optoelectronic is expected to under-perform the Ningbo Kangqiang. In addition to that, Leyard Optoelectronic is 1.47 times more volatile than Ningbo Kangqiang Electronics. It trades about -0.07 of its total potential returns per unit of risk. Ningbo Kangqiang Electronics is currently generating about 0.15 per unit of volatility. If you would invest 1,514 in Ningbo Kangqiang Electronics on October 12, 2024 and sell it today you would earn a total of 203.00 from holding Ningbo Kangqiang Electronics or generate 13.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Leyard Optoelectronic vs. Ningbo Kangqiang Electronics
Performance |
| Timeline |
| Leyard Optoelectronic |
| Ningbo Kangqiang Ele |
Leyard Optoelectronic and Ningbo Kangqiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leyard Optoelectronic and Ningbo Kangqiang
The main advantage of trading using opposite Leyard Optoelectronic and Ningbo Kangqiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leyard Optoelectronic position performs unexpectedly, Ningbo Kangqiang 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 Ningbo Kangqiang will offset losses from the drop in Ningbo Kangqiang's long position.The idea behind Leyard Optoelectronic and Ningbo Kangqiang Electronics 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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