Correlation Between Ningxia Building and Liaoning Chengda
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By analyzing existing cross correlation between Ningxia Building Materials and Liaoning Chengda Biotechnology, you can compare the effects of market volatilities on Ningxia Building and Liaoning Chengda 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 Ningxia Building with a short position of Liaoning Chengda. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningxia Building and Liaoning Chengda.
Diversification Opportunities for Ningxia Building and Liaoning Chengda
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ningxia and Liaoning is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ningxia Building Materials and Liaoning Chengda Biotechnology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Liaoning Chengda Bio and Ningxia Building 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 Ningxia Building Materials are associated (or correlated) with Liaoning Chengda. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Liaoning Chengda Bio has no effect on the direction of Ningxia Building i.e., Ningxia Building and Liaoning Chengda go up and down completely randomly.
Pair Corralation between Ningxia Building and Liaoning Chengda
Assuming the 90 days trading horizon Ningxia Building Materials is expected to generate 2.72 times more return on investment than Liaoning Chengda. However, Ningxia Building is 2.72 times more volatile than Liaoning Chengda Biotechnology. It trades about 0.01 of its potential returns per unit of risk. Liaoning Chengda Biotechnology is currently generating about -0.07 per unit of risk. If you would invest 1,500 in Ningxia Building Materials on September 29, 2024 and sell it today you would earn a total of 1.00 from holding Ningxia Building Materials or generate 0.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ningxia Building Materials vs. Liaoning Chengda Biotechnology
Performance |
| Timeline |
| Ningxia Building Mat |
| Liaoning Chengda Bio |
Ningxia Building and Liaoning Chengda Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningxia Building and Liaoning Chengda
The main advantage of trading using opposite Ningxia Building and Liaoning Chengda positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningxia Building position performs unexpectedly, Liaoning Chengda 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 Liaoning Chengda will offset losses from the drop in Liaoning Chengda's long position.| Ningxia Building vs. Zijin Mining Group | Ningxia Building vs. Wanhua Chemical Group | Ningxia Building vs. Baoshan Iron Steel | Ningxia Building vs. Shandong Gold Mining |
| Liaoning Chengda vs. Ningxia Building Materials | Liaoning Chengda vs. Chongqing Sulian Plastic | Liaoning Chengda vs. Xizi Clean Energy | Liaoning Chengda vs. GigaDevice SemiconductorBeiji |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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