Correlation Between China State and Nanxing Furniture
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By analyzing existing cross correlation between China State Construction and Nanxing Furniture Machinery, you can compare the effects of market volatilities on China State 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 China State with a short position of Nanxing Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of China State and Nanxing Furniture.
Diversification Opportunities for China State and Nanxing Furniture
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between China and Nanxing is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding China State Construction and Nanxing Furniture Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanxing Furniture and China State 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 China State Construction 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 China State i.e., China State and Nanxing Furniture go up and down completely randomly.
Pair Corralation between China State and Nanxing Furniture
Assuming the 90 days trading horizon China State Construction is expected to under-perform the Nanxing Furniture. But the stock apears to be less risky and, when comparing its historical volatility, China State Construction is 2.79 times less risky than Nanxing Furniture. The stock trades about -0.03 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 1,373 in Nanxing Furniture Machinery on August 30, 2024 and sell it today you would earn a total of 186.00 from holding Nanxing Furniture Machinery or generate 13.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China State Construction vs. Nanxing Furniture Machinery
Performance |
| Timeline |
| China State Construction |
| Nanxing Furniture |
China State and Nanxing Furniture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China State and Nanxing Furniture
The main advantage of trading using opposite China State and Nanxing Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China State 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.| China State vs. Hangzhou Gaoxin Rubber | China State vs. Orinko Advanced Plastics | China State vs. De Rucci Healthy | China State vs. Everjoy Health Group |
| Nanxing Furniture vs. China Petroleum Chemical | Nanxing Furniture vs. PetroChina Co Ltd | Nanxing Furniture vs. China State Construction | Nanxing Furniture vs. China Railway Group |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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