Correlation Between Ningbo Fangzheng and Changshu Tongrun
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By analyzing existing cross correlation between Ningbo Fangzheng Automobile and Changshu Tongrun Auto, you can compare the effects of market volatilities on Ningbo Fangzheng and Changshu Tongrun 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 Changshu Tongrun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Fangzheng and Changshu Tongrun.
Diversification Opportunities for Ningbo Fangzheng and Changshu Tongrun
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ningbo and Changshu is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Fangzheng Automobile and Changshu Tongrun Auto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Changshu Tongrun Auto 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 Changshu Tongrun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Changshu Tongrun Auto has no effect on the direction of Ningbo Fangzheng i.e., Ningbo Fangzheng and Changshu Tongrun go up and down completely randomly.
Pair Corralation between Ningbo Fangzheng and Changshu Tongrun
Assuming the 90 days trading horizon Ningbo Fangzheng Automobile is expected to under-perform the Changshu Tongrun. But the stock apears to be less risky and, when comparing its historical volatility, Ningbo Fangzheng Automobile is 1.2 times less risky than Changshu Tongrun. The stock trades about -0.09 of its potential returns per unit of risk. The Changshu Tongrun Auto is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1,725 in Changshu Tongrun Auto on August 25, 2024 and sell it today you would earn a total of 88.00 from holding Changshu Tongrun Auto or generate 5.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ningbo Fangzheng Automobile vs. Changshu Tongrun Auto
Performance |
| Timeline |
| Ningbo Fangzheng Aut |
| Changshu Tongrun Auto |
Ningbo Fangzheng and Changshu Tongrun Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningbo Fangzheng and Changshu Tongrun
The main advantage of trading using opposite Ningbo Fangzheng and Changshu Tongrun positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo Fangzheng position performs unexpectedly, Changshu Tongrun 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 Changshu Tongrun will offset losses from the drop in Changshu Tongrun's long position.| Ningbo Fangzheng vs. Loongson Technology Corp | Ningbo Fangzheng vs. Chongqing Road Bridge | Ningbo Fangzheng vs. Shenzhen Fortune Trend | Ningbo Fangzheng vs. Wuhan Xianglong Power |
| Changshu Tongrun vs. Crown Advanced Material | Changshu Tongrun vs. Ningbo Fangzheng Automobile | Changshu Tongrun vs. Dongfeng Automobile Co | Changshu Tongrun vs. Anhui Jianghuai Automobile |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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