Correlation Between Datang HuaYin and Ningbo Construction
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By analyzing existing cross correlation between Datang HuaYin Electric and Ningbo Construction Co, you can compare the effects of market volatilities on Datang HuaYin and Ningbo Construction 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 Datang HuaYin with a short position of Ningbo Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Datang HuaYin and Ningbo Construction.
Diversification Opportunities for Datang HuaYin and Ningbo Construction
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Datang and Ningbo is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Datang HuaYin Electric and Ningbo Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Construction and Datang HuaYin 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 Datang HuaYin Electric are associated (or correlated) with Ningbo Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Construction has no effect on the direction of Datang HuaYin i.e., Datang HuaYin and Ningbo Construction go up and down completely randomly.
Pair Corralation between Datang HuaYin and Ningbo Construction
Assuming the 90 days trading horizon Datang HuaYin Electric is expected to under-perform the Ningbo Construction. In addition to that, Datang HuaYin is 1.02 times more volatile than Ningbo Construction Co. It trades about -0.01 of its total potential returns per unit of risk. Ningbo Construction Co is currently generating about 0.01 per unit of volatility. If you would invest 447.00 in Ningbo Construction Co on August 28, 2024 and sell it today you would earn a total of 11.00 from holding Ningbo Construction Co or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Datang HuaYin Electric vs. Ningbo Construction Co
Performance |
| Timeline |
| Datang HuaYin Electric |
| Ningbo Construction |
Datang HuaYin and Ningbo Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Datang HuaYin and Ningbo Construction
The main advantage of trading using opposite Datang HuaYin and Ningbo Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Datang HuaYin position performs unexpectedly, Ningbo Construction 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 Construction will offset losses from the drop in Ningbo Construction's long position.| Datang HuaYin vs. Industrial and Commercial | Datang HuaYin vs. China Construction Bank | Datang HuaYin vs. Agricultural Bank of | Datang HuaYin vs. Bank of China |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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