Correlation Between Ningbo Fangzheng and Guangzhou Zhujiang
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By analyzing existing cross correlation between Ningbo Fangzheng Automobile and Guangzhou Zhujiang Brewery, you can compare the effects of market volatilities on Ningbo Fangzheng and Guangzhou Zhujiang 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 Ningbo Fangzheng with a short position of Guangzhou Zhujiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Fangzheng and Guangzhou Zhujiang.
Diversification Opportunities for Ningbo Fangzheng and Guangzhou Zhujiang
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ningbo and Guangzhou is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Fangzheng Automobile and Guangzhou Zhujiang Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Zhujiang and Ningbo Fangzheng 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 Ningbo Fangzheng Automobile are associated (or correlated) with Guangzhou Zhujiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Zhujiang has no effect on the direction of Ningbo Fangzheng i.e., Ningbo Fangzheng and Guangzhou Zhujiang go up and down completely randomly.
Pair Corralation between Ningbo Fangzheng and Guangzhou Zhujiang
Assuming the 90 days trading horizon Ningbo Fangzheng Automobile is expected to under-perform the Guangzhou Zhujiang. In addition to that, Ningbo Fangzheng is 1.96 times more volatile than Guangzhou Zhujiang Brewery. It trades about -0.06 of its total potential returns per unit of risk. Guangzhou Zhujiang Brewery is currently generating about 0.06 per unit of volatility. If you would invest 806.00 in Guangzhou Zhujiang Brewery on September 1, 2024 and sell it today you would earn a total of 108.00 from holding Guangzhou Zhujiang Brewery or generate 13.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ningbo Fangzheng Automobile vs. Guangzhou Zhujiang Brewery
Performance |
| Timeline |
| Ningbo Fangzheng Aut |
| Guangzhou Zhujiang |
Ningbo Fangzheng and Guangzhou Zhujiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningbo Fangzheng and Guangzhou Zhujiang
The main advantage of trading using opposite Ningbo Fangzheng and Guangzhou Zhujiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo Fangzheng position performs unexpectedly, Guangzhou Zhujiang 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 Guangzhou Zhujiang will offset losses from the drop in Guangzhou Zhujiang's long position.| Ningbo Fangzheng vs. Hangzhou Prevail Optoelectronic | Ningbo Fangzheng vs. Xizi Clean Energy | Ningbo Fangzheng vs. AVIC Fund Management | Ningbo Fangzheng vs. Harvest Fund Management |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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