Correlation Between Ningbo Construction and Zhejiang Construction
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By analyzing existing cross correlation between Ningbo Construction Co and Zhejiang Construction Investment, you can compare the effects of market volatilities on Ningbo Construction and Zhejiang Construction 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 Zhejiang Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Construction and Zhejiang Construction.
Diversification Opportunities for Ningbo Construction and Zhejiang Construction
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ningbo and Zhejiang is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Construction Co and Zhejiang Construction Investme in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zhejiang Construction 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 Zhejiang Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zhejiang Construction has no effect on the direction of Ningbo Construction i.e., Ningbo Construction and Zhejiang Construction go up and down completely randomly.
Pair Corralation between Ningbo Construction and Zhejiang Construction
Assuming the 90 days trading horizon Ningbo Construction is expected to generate 1.6 times less return on investment than Zhejiang Construction. But when comparing it to its historical volatility, Ningbo Construction Co is 1.19 times less risky than Zhejiang Construction. It trades about 0.13 of its potential returns per unit of risk. Zhejiang Construction Investment is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 874.00 in Zhejiang Construction Investment on August 30, 2024 and sell it today you would earn a total of 142.00 from holding Zhejiang Construction Investment or generate 16.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ningbo Construction Co vs. Zhejiang Construction Investme
Performance |
| Timeline |
| Ningbo Construction |
| Zhejiang Construction |
Ningbo Construction and Zhejiang Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningbo Construction and Zhejiang Construction
The main advantage of trading using opposite Ningbo Construction and Zhejiang Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo Construction position performs unexpectedly, Zhejiang Construction 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 Zhejiang Construction will offset losses from the drop in Zhejiang Construction's long position.| Ningbo Construction vs. Cangzhou Mingzhu Plastic | Ningbo Construction vs. GRIPM Advanced Materials | Ningbo Construction vs. Advanced Technology Materials | Ningbo Construction vs. China Publishing Media |
| Zhejiang Construction vs. Agricultural Bank of | Zhejiang Construction vs. Industrial and Commercial | Zhejiang Construction vs. Bank of China | Zhejiang Construction vs. China Construction Bank |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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