Correlation Between Ningbo Construction and Chengdu Xingrong
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By analyzing existing cross correlation between Ningbo Construction Co and Chengdu Xingrong Investment, you can compare the effects of market volatilities on Ningbo Construction and Chengdu Xingrong 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 Construction with a short position of Chengdu Xingrong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Construction and Chengdu Xingrong.
Diversification Opportunities for Ningbo Construction and Chengdu Xingrong
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ningbo and Chengdu is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Construction Co and Chengdu Xingrong Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chengdu Xingrong Inv and Ningbo Construction 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 Construction Co are associated (or correlated) with Chengdu Xingrong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chengdu Xingrong Inv has no effect on the direction of Ningbo Construction i.e., Ningbo Construction and Chengdu Xingrong go up and down completely randomly.
Pair Corralation between Ningbo Construction and Chengdu Xingrong
Assuming the 90 days trading horizon Ningbo Construction is expected to generate 7.43 times less return on investment than Chengdu Xingrong. In addition to that, Ningbo Construction is 1.51 times more volatile than Chengdu Xingrong Investment. It trades about 0.0 of its total potential returns per unit of risk. Chengdu Xingrong Investment is currently generating about 0.05 per unit of volatility. If you would invest 478.00 in Chengdu Xingrong Investment on October 15, 2024 and sell it today you would earn a total of 217.00 from holding Chengdu Xingrong Investment or generate 45.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ningbo Construction Co vs. Chengdu Xingrong Investment
Performance |
| Timeline |
| Ningbo Construction |
| Chengdu Xingrong Inv |
Ningbo Construction and Chengdu Xingrong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningbo Construction and Chengdu Xingrong
The main advantage of trading using opposite Ningbo Construction and Chengdu Xingrong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo Construction position performs unexpectedly, Chengdu Xingrong 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 Chengdu Xingrong will offset losses from the drop in Chengdu Xingrong's long position.The idea behind Ningbo Construction Co and Chengdu Xingrong Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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