Correlation Between Shenzhen Urban and NBTM New
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By analyzing existing cross correlation between Shenzhen Urban Transport and NBTM New Materials, you can compare the effects of market volatilities on Shenzhen Urban and NBTM New 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 Shenzhen Urban with a short position of NBTM New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Urban and NBTM New.
Diversification Opportunities for Shenzhen Urban and NBTM New
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shenzhen and NBTM is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Urban Transport and NBTM New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBTM New Materials and Shenzhen Urban 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 Shenzhen Urban Transport are associated (or correlated) with NBTM New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBTM New Materials has no effect on the direction of Shenzhen Urban i.e., Shenzhen Urban and NBTM New go up and down completely randomly.
Pair Corralation between Shenzhen Urban and NBTM New
Assuming the 90 days trading horizon Shenzhen Urban Transport is expected to generate 1.72 times more return on investment than NBTM New. However, Shenzhen Urban is 1.72 times more volatile than NBTM New Materials. It trades about 0.12 of its potential returns per unit of risk. NBTM New Materials is currently generating about 0.07 per unit of risk. If you would invest 1,403 in Shenzhen Urban Transport on November 8, 2024 and sell it today you would earn a total of 3,283 from holding Shenzhen Urban Transport or generate 234.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shenzhen Urban Transport vs. NBTM New Materials
Performance |
| Timeline |
| Shenzhen Urban Transport |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| NBTM New Materials |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Shenzhen Urban and NBTM New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shenzhen Urban and NBTM New
The main advantage of trading using opposite Shenzhen Urban and NBTM New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Urban position performs unexpectedly, NBTM New 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 NBTM New will offset losses from the drop in NBTM New's long position.The idea behind Shenzhen Urban Transport and NBTM New Materials 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.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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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