Correlation Between NBTM New and Penyao Environmental
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By analyzing existing cross correlation between NBTM New Materials and Penyao Environmental Protection, you can compare the effects of market volatilities on NBTM New and Penyao Environmental 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 NBTM New with a short position of Penyao Environmental. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBTM New and Penyao Environmental.
Diversification Opportunities for NBTM New and Penyao Environmental
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NBTM and Penyao is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding NBTM New Materials and Penyao Environmental Protectio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penyao Environmental and NBTM New 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 NBTM New Materials are associated (or correlated) with Penyao Environmental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penyao Environmental has no effect on the direction of NBTM New i.e., NBTM New and Penyao Environmental go up and down completely randomly.
Pair Corralation between NBTM New and Penyao Environmental
Assuming the 90 days trading horizon NBTM New Materials is expected to generate 2.44 times more return on investment than Penyao Environmental. However, NBTM New is 2.44 times more volatile than Penyao Environmental Protection. It trades about 0.46 of its potential returns per unit of risk. Penyao Environmental Protection is currently generating about -0.12 per unit of risk. If you would invest 1,538 in NBTM New Materials on November 8, 2024 and sell it today you would earn a total of 478.00 from holding NBTM New Materials or generate 31.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NBTM New Materials vs. Penyao Environmental Protectio
Performance |
| Timeline |
| NBTM New Materials |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Penyao Environmental |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
NBTM New and Penyao Environmental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NBTM New and Penyao Environmental
The main advantage of trading using opposite NBTM New and Penyao Environmental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBTM New position performs unexpectedly, Penyao Environmental 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 Penyao Environmental will offset losses from the drop in Penyao Environmental's long position.The idea behind NBTM New Materials and Penyao Environmental Protection 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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