Correlation Between NBTM New and China Building
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By analyzing existing cross correlation between NBTM New Materials and China Building Material, you can compare the effects of market volatilities on NBTM New and China Building 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 China Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBTM New and China Building.
Diversification Opportunities for NBTM New and China Building
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NBTM and China is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding NBTM New Materials and China Building Material in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Building Material 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 China Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Building Material has no effect on the direction of NBTM New i.e., NBTM New and China Building go up and down completely randomly.
Pair Corralation between NBTM New and China Building
Assuming the 90 days trading horizon NBTM New Materials is expected to generate 0.66 times more return on investment than China Building. However, NBTM New Materials is 1.52 times less risky than China Building. It trades about 0.06 of its potential returns per unit of risk. China Building Material is currently generating about -0.08 per unit of risk. If you would invest 1,014 in NBTM New Materials on November 9, 2024 and sell it today you would earn a total of 1,002 from holding NBTM New Materials or generate 98.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 18.53% |
| Values | Daily Returns |
NBTM New Materials vs. China Building Material
Performance |
| Timeline |
| NBTM New Materials |
Risk-Adjusted Performance
Modest
Weak | Strong |
| China Building Material |
Risk-Adjusted Performance
Excellent
Weak | Strong |
NBTM New and China Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NBTM New and China Building
The main advantage of trading using opposite NBTM New and China Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBTM New position performs unexpectedly, China Building 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 China Building will offset losses from the drop in China Building's long position.The idea behind NBTM New Materials and China Building Material 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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