Correlation Between ButOne Information and Nanxing Furniture
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By analyzing existing cross correlation between ButOne Information Corp and Nanxing Furniture Machinery, you can compare the effects of market volatilities on ButOne Information and Nanxing Furniture 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 ButOne Information with a short position of Nanxing Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of ButOne Information and Nanxing Furniture.
Diversification Opportunities for ButOne Information and Nanxing Furniture
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ButOne and Nanxing is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding ButOne Information Corp and Nanxing Furniture Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanxing Furniture and ButOne Information 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 ButOne Information Corp are associated (or correlated) with Nanxing Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanxing Furniture has no effect on the direction of ButOne Information i.e., ButOne Information and Nanxing Furniture go up and down completely randomly.
Pair Corralation between ButOne Information and Nanxing Furniture
Assuming the 90 days trading horizon ButOne Information is expected to generate 2.65 times less return on investment than Nanxing Furniture. But when comparing it to its historical volatility, ButOne Information Corp is 2.52 times less risky than Nanxing Furniture. It trades about 0.18 of its potential returns per unit of risk. Nanxing Furniture Machinery is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,355 in Nanxing Furniture Machinery on September 13, 2024 and sell it today you would earn a total of 313.00 from holding Nanxing Furniture Machinery or generate 23.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
ButOne Information Corp vs. Nanxing Furniture Machinery
Performance |
| Timeline |
| ButOne Information Corp |
| Nanxing Furniture |
ButOne Information and Nanxing Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ButOne Information and Nanxing Furniture
The main advantage of trading using opposite ButOne Information and Nanxing Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ButOne Information position performs unexpectedly, Nanxing Furniture 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 Nanxing Furniture will offset losses from the drop in Nanxing Furniture's long position.The idea behind ButOne Information Corp and Nanxing Furniture Machinery 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.
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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