Correlation Between Ningbo Thermal and Dongfeng Automobile
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By analyzing existing cross correlation between Ningbo Thermal Power and Dongfeng Automobile Co, you can compare the effects of market volatilities on Ningbo Thermal and Dongfeng Automobile 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 Ningbo Thermal with a short position of Dongfeng Automobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Thermal and Dongfeng Automobile.
Diversification Opportunities for Ningbo Thermal and Dongfeng Automobile
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ningbo and Dongfeng is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Thermal Power and Dongfeng Automobile Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dongfeng Automobile and Ningbo 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 Ningbo Thermal Power are associated (or correlated) with Dongfeng Automobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dongfeng Automobile has no effect on the direction of Ningbo Thermal i.e., Ningbo Thermal and Dongfeng Automobile go up and down completely randomly.
Pair Corralation between Ningbo Thermal and Dongfeng Automobile
Assuming the 90 days trading horizon Ningbo Thermal is expected to generate 1.34 times less return on investment than Dongfeng Automobile. But when comparing it to its historical volatility, Ningbo Thermal Power is 1.48 times less risky than Dongfeng Automobile. It trades about 0.04 of its potential returns per unit of risk. Dongfeng Automobile Co is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 550.00 in Dongfeng Automobile Co on November 3, 2024 and sell it today you would earn a total of 115.00 from holding Dongfeng Automobile Co or generate 20.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ningbo Thermal Power vs. Dongfeng Automobile Co
Performance |
| Timeline |
| Ningbo Thermal Power |
| Dongfeng Automobile |
Ningbo Thermal and Dongfeng Automobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningbo Thermal and Dongfeng Automobile
The main advantage of trading using opposite Ningbo Thermal and Dongfeng Automobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo Thermal position performs unexpectedly, Dongfeng Automobile 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 Dongfeng Automobile will offset losses from the drop in Dongfeng Automobile's long position.| Ningbo Thermal vs. Thunder Software Technology | Ningbo Thermal vs. Wuhan Yangtze Communication | Ningbo Thermal vs. Fibocom Wireless | Ningbo Thermal vs. Jiangsu Hoperun Software |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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