Correlation Between Gome Telecom and Ningbo Thermal
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By analyzing existing cross correlation between Gome Telecom Equipment and Ningbo Thermal Power, you can compare the effects of market volatilities on Gome Telecom and Ningbo Thermal 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 Gome Telecom with a short position of Ningbo Thermal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gome Telecom and Ningbo Thermal.
Diversification Opportunities for Gome Telecom and Ningbo Thermal
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Gome and Ningbo is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Gome Telecom Equipment and Ningbo Thermal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Thermal Power and Gome Telecom 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 Gome Telecom Equipment are associated (or correlated) with Ningbo Thermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Thermal Power has no effect on the direction of Gome Telecom i.e., Gome Telecom and Ningbo Thermal go up and down completely randomly.
Pair Corralation between Gome Telecom and Ningbo Thermal
Assuming the 90 days trading horizon Gome Telecom Equipment is expected to generate 2.6 times more return on investment than Ningbo Thermal. However, Gome Telecom is 2.6 times more volatile than Ningbo Thermal Power. It trades about 0.14 of its potential returns per unit of risk. Ningbo Thermal Power is currently generating about 0.14 per unit of risk. If you would invest 168.00 in Gome Telecom Equipment on September 5, 2024 and sell it today you would earn a total of 18.00 from holding Gome Telecom Equipment or generate 10.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gome Telecom Equipment vs. Ningbo Thermal Power
Performance |
| Timeline |
| Gome Telecom Equipment |
| Ningbo Thermal Power |
Gome Telecom and Ningbo Thermal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gome Telecom and Ningbo Thermal
The main advantage of trading using opposite Gome Telecom and Ningbo Thermal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gome Telecom position performs unexpectedly, Ningbo Thermal 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 Thermal will offset losses from the drop in Ningbo Thermal's long position.| Gome Telecom vs. Guangzhou KingTeller Technology | Gome Telecom vs. Hoshine Silicon Ind | Gome Telecom vs. Kingsignal Technology Co | Gome Telecom vs. Kangping Technology Co |
| Ningbo Thermal vs. China Aluminum International | Ningbo Thermal vs. Aluminum Corp of | Ningbo Thermal vs. Guangdong Jingyi Metal | Ningbo Thermal vs. Zhejiang Yayi Metal |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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