Correlation Between Ningbo Construction and Henzhen Zhaowei
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By analyzing existing cross correlation between Ningbo Construction Co and Henzhen Zhaowei Machinery, you can compare the effects of market volatilities on Ningbo Construction and Henzhen Zhaowei 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 Henzhen Zhaowei. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Construction and Henzhen Zhaowei.
Diversification Opportunities for Ningbo Construction and Henzhen Zhaowei
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Ningbo and Henzhen is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Construction Co and Henzhen Zhaowei Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Henzhen Zhaowei Machinery 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 Henzhen Zhaowei. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Henzhen Zhaowei Machinery has no effect on the direction of Ningbo Construction i.e., Ningbo Construction and Henzhen Zhaowei go up and down completely randomly.
Pair Corralation between Ningbo Construction and Henzhen Zhaowei
Assuming the 90 days trading horizon Ningbo Construction is expected to generate 2.36 times less return on investment than Henzhen Zhaowei. But when comparing it to its historical volatility, Ningbo Construction Co is 1.31 times less risky than Henzhen Zhaowei. It trades about 0.19 of its potential returns per unit of risk. Henzhen Zhaowei Machinery is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 3,912 in Henzhen Zhaowei Machinery on August 27, 2024 and sell it today you would earn a total of 3,571 from holding Henzhen Zhaowei Machinery or generate 91.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ningbo Construction Co vs. Henzhen Zhaowei Machinery
Performance |
| Timeline |
| Ningbo Construction |
| Henzhen Zhaowei Machinery |
Ningbo Construction and Henzhen Zhaowei Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningbo Construction and Henzhen Zhaowei
The main advantage of trading using opposite Ningbo Construction and Henzhen Zhaowei positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo Construction position performs unexpectedly, Henzhen Zhaowei 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 Henzhen Zhaowei will offset losses from the drop in Henzhen Zhaowei's long position.| Ningbo Construction vs. Songz Automobile Air | Ningbo Construction vs. Guangzhou Haige Communications | Ningbo Construction vs. HaiXin Foods Co | Ningbo Construction vs. New Hope Dairy |
| Henzhen Zhaowei vs. Jiajia Food Group | Henzhen Zhaowei vs. Tongyu Communication | Henzhen Zhaowei vs. CICT Mobile Communication | Henzhen Zhaowei vs. Guangzhou Haige Communications |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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