Correlation Between Ningbo Thermal and Qumei Furniture
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By analyzing existing cross correlation between Ningbo Thermal Power and Qumei Furniture Group, you can compare the effects of market volatilities on Ningbo Thermal and Qumei Furniture 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 Qumei Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Thermal and Qumei Furniture.
Diversification Opportunities for Ningbo Thermal and Qumei Furniture
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ningbo and Qumei is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Thermal Power and Qumei Furniture Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qumei Furniture Group 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 Qumei Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qumei Furniture Group has no effect on the direction of Ningbo Thermal i.e., Ningbo Thermal and Qumei Furniture go up and down completely randomly.
Pair Corralation between Ningbo Thermal and Qumei Furniture
Assuming the 90 days trading horizon Ningbo Thermal is expected to generate 2.39 times less return on investment than Qumei Furniture. But when comparing it to its historical volatility, Ningbo Thermal Power is 1.98 times less risky than Qumei Furniture. It trades about 0.1 of its potential returns per unit of risk. Qumei Furniture Group is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 248.00 in Qumei Furniture Group on September 5, 2024 and sell it today you would earn a total of 88.00 from holding Qumei Furniture Group or generate 35.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.75% |
| Values | Daily Returns |
Ningbo Thermal Power vs. Qumei Furniture Group
Performance |
| Timeline |
| Ningbo Thermal Power |
| Qumei Furniture Group |
Ningbo Thermal and Qumei Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningbo Thermal and Qumei Furniture
The main advantage of trading using opposite Ningbo Thermal and Qumei Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo Thermal position performs unexpectedly, Qumei Furniture 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 Qumei Furniture will offset losses from the drop in Qumei Furniture's long position.| Ningbo Thermal vs. China Aluminum International | Ningbo Thermal vs. Aluminum Corp of | Ningbo Thermal vs. Guangdong Jingyi Metal | Ningbo Thermal vs. Zhejiang Yayi Metal |
| Qumei Furniture vs. Ningbo Thermal Power | Qumei Furniture vs. Shenyang Huitian Thermal | Qumei Furniture vs. Minmetals Capital Co | Qumei Furniture vs. Beijing HuaYuanYiTong Thermal |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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