Correlation Between Tengda Construction and Nanxing Furniture
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By analyzing existing cross correlation between Tengda Construction Group and Nanxing Furniture Machinery, you can compare the effects of market volatilities on Tengda Construction 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 Tengda Construction with a short position of Nanxing Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tengda Construction and Nanxing Furniture.
Diversification Opportunities for Tengda Construction and Nanxing Furniture
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tengda and Nanxing is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Tengda Construction Group and Nanxing Furniture Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanxing Furniture and Tengda Construction 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 Tengda Construction Group 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 Tengda Construction i.e., Tengda Construction and Nanxing Furniture go up and down completely randomly.
Pair Corralation between Tengda Construction and Nanxing Furniture
Assuming the 90 days trading horizon Tengda Construction is expected to generate 1.26 times less return on investment than Nanxing Furniture. But when comparing it to its historical volatility, Tengda Construction Group is 1.55 times less risky than Nanxing Furniture. It trades about 0.1 of its potential returns per unit of risk. Nanxing Furniture Machinery is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 1,171 in Nanxing Furniture Machinery on September 27, 2024 and sell it today you would earn a total of 329.00 from holding Nanxing Furniture Machinery or generate 28.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tengda Construction Group vs. Nanxing Furniture Machinery
Performance |
| Timeline |
| Tengda Construction |
| Nanxing Furniture |
Tengda Construction and Nanxing Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tengda Construction and Nanxing Furniture
The main advantage of trading using opposite Tengda Construction and Nanxing Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tengda Construction 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.| Tengda Construction vs. Ming Yang Smart | Tengda Construction vs. 159681 | Tengda Construction vs. 159005 | Tengda Construction vs. Loctek Ergonomic Technology |
| Nanxing Furniture vs. Bank of China | Nanxing Furniture vs. Kweichow Moutai Co | Nanxing Furniture vs. PetroChina Co Ltd | Nanxing Furniture vs. Bank of Communications |
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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