Correlation Between NBTM New and Guangdong Marubi
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By analyzing existing cross correlation between NBTM New Materials and Guangdong Marubi Biotechnology, you can compare the effects of market volatilities on NBTM New and Guangdong Marubi 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 Guangdong Marubi. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBTM New and Guangdong Marubi.
Diversification Opportunities for NBTM New and Guangdong Marubi
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between NBTM and Guangdong is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding NBTM New Materials and Guangdong Marubi Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Marubi Bio 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 Guangdong Marubi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Marubi Bio has no effect on the direction of NBTM New i.e., NBTM New and Guangdong Marubi go up and down completely randomly.
Pair Corralation between NBTM New and Guangdong Marubi
Assuming the 90 days trading horizon NBTM New Materials is expected to generate 1.84 times more return on investment than Guangdong Marubi. However, NBTM New is 1.84 times more volatile than Guangdong Marubi Biotechnology. It trades about 0.48 of its potential returns per unit of risk. Guangdong Marubi Biotechnology is currently generating about -0.14 per unit of risk. If you would invest 1,536 in NBTM New Materials on November 9, 2024 and sell it today you would earn a total of 480.00 from holding NBTM New Materials or generate 31.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NBTM New Materials vs. Guangdong Marubi Biotechnology
Performance |
| Timeline |
| NBTM New Materials |
Risk-Adjusted Performance
Modest
Weak | Strong |
| Guangdong Marubi Bio |
Risk-Adjusted Performance
Weak
Weak | Strong |
NBTM New and Guangdong Marubi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NBTM New and Guangdong Marubi
The main advantage of trading using opposite NBTM New and Guangdong Marubi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBTM New position performs unexpectedly, Guangdong Marubi 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 Guangdong Marubi will offset losses from the drop in Guangdong Marubi's long position.The idea behind NBTM New Materials and Guangdong Marubi Biotechnology 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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