Correlation Between Dalian Thermal and Ningbo Fangzheng
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By analyzing existing cross correlation between Dalian Thermal Power and Ningbo Fangzheng Automobile, you can compare the effects of market volatilities on Dalian Thermal and Ningbo Fangzheng 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 Dalian Thermal with a short position of Ningbo Fangzheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dalian Thermal and Ningbo Fangzheng.
Diversification Opportunities for Dalian Thermal and Ningbo Fangzheng
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dalian and Ningbo is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Dalian Thermal Power and Ningbo Fangzheng Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Fangzheng Aut and Dalian Thermal 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 Dalian Thermal Power are associated (or correlated) with Ningbo Fangzheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Fangzheng Aut has no effect on the direction of Dalian Thermal i.e., Dalian Thermal and Ningbo Fangzheng go up and down completely randomly.
Pair Corralation between Dalian Thermal and Ningbo Fangzheng
Assuming the 90 days trading horizon Dalian Thermal is expected to generate 1.6 times less return on investment than Ningbo Fangzheng. In addition to that, Dalian Thermal is 1.08 times more volatile than Ningbo Fangzheng Automobile. It trades about 0.1 of its total potential returns per unit of risk. Ningbo Fangzheng Automobile is currently generating about 0.17 per unit of volatility. If you would invest 1,475 in Ningbo Fangzheng Automobile on September 5, 2024 and sell it today you would earn a total of 174.00 from holding Ningbo Fangzheng Automobile or generate 11.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dalian Thermal Power vs. Ningbo Fangzheng Automobile
Performance |
| Timeline |
| Dalian Thermal Power |
| Ningbo Fangzheng Aut |
Dalian Thermal and Ningbo Fangzheng Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dalian Thermal and Ningbo Fangzheng
The main advantage of trading using opposite Dalian Thermal and Ningbo Fangzheng positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dalian Thermal position performs unexpectedly, Ningbo Fangzheng 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 Ningbo Fangzheng will offset losses from the drop in Ningbo Fangzheng's long position.| Dalian Thermal vs. Tieling Newcity Investment | Dalian Thermal vs. Kingclean Electric Co | Dalian Thermal vs. Shandong Longquan Pipeline | Dalian Thermal vs. Oppein Home Group |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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