Correlation Between Nanning Chemical and Xinjiang Communications
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By analyzing existing cross correlation between Nanning Chemical Industry and Xinjiang Communications Construction, you can compare the effects of market volatilities on Nanning Chemical and Xinjiang Communications 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 Nanning Chemical with a short position of Xinjiang Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanning Chemical and Xinjiang Communications.
Diversification Opportunities for Nanning Chemical and Xinjiang Communications
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nanning and Xinjiang is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nanning Chemical Industry and Xinjiang Communications Constr in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xinjiang Communications and Nanning Chemical 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 Nanning Chemical Industry are associated (or correlated) with Xinjiang Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xinjiang Communications has no effect on the direction of Nanning Chemical i.e., Nanning Chemical and Xinjiang Communications go up and down completely randomly.
Pair Corralation between Nanning Chemical and Xinjiang Communications
Assuming the 90 days trading horizon Nanning Chemical Industry is expected to generate 1.2 times more return on investment than Xinjiang Communications. However, Nanning Chemical is 1.2 times more volatile than Xinjiang Communications Construction. It trades about 0.06 of its potential returns per unit of risk. Xinjiang Communications Construction is currently generating about 0.01 per unit of risk. If you would invest 1,227 in Nanning Chemical Industry on October 20, 2024 and sell it today you would earn a total of 493.00 from holding Nanning Chemical Industry or generate 40.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nanning Chemical Industry vs. Xinjiang Communications Constr
Performance |
| Timeline |
| Nanning Chemical Industry |
| Xinjiang Communications |
Nanning Chemical and Xinjiang Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanning Chemical and Xinjiang Communications
The main advantage of trading using opposite Nanning Chemical and Xinjiang Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanning Chemical position performs unexpectedly, Xinjiang Communications 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 Xinjiang Communications will offset losses from the drop in Xinjiang Communications' long position.| Nanning Chemical vs. Nanjing OLO Home | Nanning Chemical vs. Beijing Kingsoft Office | Nanning Chemical vs. DO Home Collection | Nanning Chemical vs. Hunan Mendale Hometextile |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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