Correlation Between SI TECH and Ningbo Tech

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Can any of the company-specific risk be diversified away by investing in both SI TECH and Ningbo Tech at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining SI TECH and Ningbo Tech into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SI TECH Information Technology and Ningbo Tech Bank Co, you can compare the effects of market volatilities on SI TECH and Ningbo Tech 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 SI TECH with a short position of Ningbo Tech. Check out your portfolio center. Please also check ongoing floating volatility patterns of SI TECH and Ningbo Tech.

Diversification Opportunities for SI TECH and Ningbo Tech

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between 300608 and Ningbo is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding SI TECH Information Technology and Ningbo Tech Bank Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Tech Bank and SI TECH 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 SI TECH Information Technology are associated (or correlated) with Ningbo Tech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Tech Bank has no effect on the direction of SI TECH i.e., SI TECH and Ningbo Tech go up and down completely randomly.

Pair Corralation between SI TECH and Ningbo Tech

Assuming the 90 days trading horizon SI TECH Information Technology is expected to under-perform the Ningbo Tech. In addition to that, SI TECH is 1.6 times more volatile than Ningbo Tech Bank Co. It trades about -0.31 of its total potential returns per unit of risk. Ningbo Tech Bank Co is currently generating about -0.17 per unit of volatility. If you would invest  306.00  in Ningbo Tech Bank Co on October 17, 2024 and sell it today you would lose (27.00) from holding Ningbo Tech Bank Co or give up 8.82% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

SI TECH Information Technology  vs.  Ningbo Tech Bank Co

 Performance 
       Timeline  
SI TECH Information 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days SI TECH Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.
Ningbo Tech Bank 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Tech Bank Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Tech may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SI TECH and Ningbo Tech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with SI TECH and Ningbo Tech

The main advantage of trading using opposite SI TECH and Ningbo Tech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SI TECH position performs unexpectedly, Ningbo Tech 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 Tech will offset losses from the drop in Ningbo Tech's long position.
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The idea behind SI TECH Information Technology and Ningbo Tech Bank Co 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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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.

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