Correlation Between New China and Nanxing Furniture
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By analyzing existing cross correlation between New China Life and Nanxing Furniture Machinery, you can compare the effects of market volatilities on New China and Nanxing 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 New China with a short position of Nanxing Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of New China and Nanxing Furniture.
Diversification Opportunities for New China and Nanxing Furniture
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between New and Nanxing is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding New China Life and Nanxing Furniture Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanxing Furniture and New China 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 New China Life are associated (or correlated) with Nanxing Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanxing Furniture has no effect on the direction of New China i.e., New China and Nanxing Furniture go up and down completely randomly.
Pair Corralation between New China and Nanxing Furniture
Assuming the 90 days trading horizon New China Life is expected to under-perform the Nanxing Furniture. But the stock apears to be less risky and, when comparing its historical volatility, New China Life is 1.57 times less risky than Nanxing Furniture. The stock trades about 0.0 of its potential returns per unit of risk. The Nanxing Furniture Machinery is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 1,340 in Nanxing Furniture Machinery on September 1, 2024 and sell it today you would earn a total of 179.00 from holding Nanxing Furniture Machinery or generate 13.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
New China Life vs. Nanxing Furniture Machinery
Performance |
| Timeline |
| New China Life |
| Nanxing Furniture |
New China and Nanxing Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New China and Nanxing Furniture
The main advantage of trading using opposite New China and Nanxing Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New China position performs unexpectedly, Nanxing 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 Nanxing Furniture will offset losses from the drop in Nanxing Furniture's long position.| New China vs. Southchip Semiconductor Technology | New China vs. Rising Nonferrous Metals | New China vs. Shandong Hongchuang Aluminum | New China vs. StarPower Semiconductor |
| Nanxing Furniture vs. New China Life | Nanxing Furniture vs. Ming Yang Smart | Nanxing Furniture vs. 159681 | Nanxing Furniture vs. 159005 |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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