Correlation Between Yangmei Chemical and Nanhua Bio
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By analyzing existing cross correlation between Yangmei Chemical Co and Nanhua Bio Medicine, you can compare the effects of market volatilities on Yangmei Chemical and Nanhua Bio 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 Yangmei Chemical with a short position of Nanhua Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yangmei Chemical and Nanhua Bio.
Diversification Opportunities for Yangmei Chemical and Nanhua Bio
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Yangmei and Nanhua is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Yangmei Chemical Co and Nanhua Bio Medicine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanhua Bio Medicine and Yangmei 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 Yangmei Chemical Co are associated (or correlated) with Nanhua Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanhua Bio Medicine has no effect on the direction of Yangmei Chemical i.e., Yangmei Chemical and Nanhua Bio go up and down completely randomly.
Pair Corralation between Yangmei Chemical and Nanhua Bio
Assuming the 90 days trading horizon Yangmei Chemical is expected to generate 1.56 times less return on investment than Nanhua Bio. But when comparing it to its historical volatility, Yangmei Chemical Co is 1.14 times less risky than Nanhua Bio. It trades about 0.01 of its potential returns per unit of risk. Nanhua Bio Medicine is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,035 in Nanhua Bio Medicine on September 1, 2024 and sell it today you would lose (5.00) from holding Nanhua Bio Medicine or give up 0.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Yangmei Chemical Co vs. Nanhua Bio Medicine
Performance |
| Timeline |
| Yangmei Chemical |
| Nanhua Bio Medicine |
Yangmei Chemical and Nanhua Bio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Yangmei Chemical and Nanhua Bio
The main advantage of trading using opposite Yangmei Chemical and Nanhua Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Yangmei Chemical position performs unexpectedly, Nanhua Bio 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 Nanhua Bio will offset losses from the drop in Nanhua Bio's long position.| Yangmei Chemical vs. Zijin Mining Group | Yangmei Chemical vs. Wanhua Chemical Group | Yangmei Chemical vs. Baoshan Iron Steel | Yangmei Chemical vs. Shandong Gold Mining |
| Nanhua Bio vs. Beijing Bewinner Communications | Nanhua Bio vs. Yangmei Chemical Co | Nanhua Bio vs. Liuzhou Chemical Industry | Nanhua Bio vs. Anhui Huaertai Chemical |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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