Correlation Between Ningbo Fujia and Anhui Jianghuai
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By analyzing existing cross correlation between Ningbo Fujia Industrial and Anhui Jianghuai Automobile, you can compare the effects of market volatilities on Ningbo Fujia and Anhui Jianghuai 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 Fujia with a short position of Anhui Jianghuai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Fujia and Anhui Jianghuai.
Diversification Opportunities for Ningbo Fujia and Anhui Jianghuai
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Ningbo and Anhui is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Fujia Industrial and Anhui Jianghuai Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Jianghuai Auto and Ningbo Fujia 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 Fujia Industrial are associated (or correlated) with Anhui Jianghuai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Jianghuai Auto has no effect on the direction of Ningbo Fujia i.e., Ningbo Fujia and Anhui Jianghuai go up and down completely randomly.
Pair Corralation between Ningbo Fujia and Anhui Jianghuai
Assuming the 90 days trading horizon Ningbo Fujia is expected to generate 3.97 times less return on investment than Anhui Jianghuai. But when comparing it to its historical volatility, Ningbo Fujia Industrial is 1.08 times less risky than Anhui Jianghuai. It trades about 0.03 of its potential returns per unit of risk. Anhui Jianghuai Automobile is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,341 in Anhui Jianghuai Automobile on November 8, 2024 and sell it today you would earn a total of 2,635 from holding Anhui Jianghuai Automobile or generate 196.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ningbo Fujia Industrial vs. Anhui Jianghuai Automobile
Performance |
| Timeline |
| Ningbo Fujia Industrial |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Anhui Jianghuai Auto |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ningbo Fujia and Anhui Jianghuai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningbo Fujia and Anhui Jianghuai
The main advantage of trading using opposite Ningbo Fujia and Anhui Jianghuai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo Fujia position performs unexpectedly, Anhui Jianghuai 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 Anhui Jianghuai will offset losses from the drop in Anhui Jianghuai's long position.The idea behind Ningbo Fujia Industrial and Anhui Jianghuai Automobile 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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