Correlation Between China Building and NBTM New
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By analyzing existing cross correlation between China Building Material and NBTM New Materials, you can compare the effects of market volatilities on China Building and NBTM New 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 Building with a short position of NBTM New. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Building and NBTM New.
Diversification Opportunities for China Building and NBTM New
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and NBTM is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding China Building Material and NBTM New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBTM New Materials and China Building 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 Building Material are associated (or correlated) with NBTM New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBTM New Materials has no effect on the direction of China Building i.e., China Building and NBTM New go up and down completely randomly.
Pair Corralation between China Building and NBTM New
Assuming the 90 days trading horizon China Building Material is expected to under-perform the NBTM New. In addition to that, China Building is 1.52 times more volatile than NBTM New Materials. It trades about -0.08 of its total potential returns per unit of risk. NBTM New Materials is currently generating about 0.06 per unit of volatility. If you would invest 1,014 in NBTM New Materials on November 9, 2024 and sell it today you would earn a total of 1,002 from holding NBTM New Materials or generate 98.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 18.53% |
| Values | Daily Returns |
China Building Material vs. NBTM New Materials
Performance |
| Timeline |
| China Building Material |
Risk-Adjusted Performance
Excellent
Weak | Strong |
| NBTM New Materials |
Risk-Adjusted Performance
Modest
Weak | Strong |
China Building and NBTM New Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Building and NBTM New
The main advantage of trading using opposite China Building and NBTM New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Building position performs unexpectedly, NBTM New 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 NBTM New will offset losses from the drop in NBTM New's long position.The idea behind China Building Material and NBTM New Materials 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.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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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