Correlation Between Sichuan Teway and Ningxia Younglight
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By analyzing existing cross correlation between Sichuan Teway Food and Ningxia Younglight Chemicals, you can compare the effects of market volatilities on Sichuan Teway and Ningxia Younglight 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 Sichuan Teway with a short position of Ningxia Younglight. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Teway and Ningxia Younglight.
Diversification Opportunities for Sichuan Teway and Ningxia Younglight
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Sichuan and Ningxia is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Teway Food and Ningxia Younglight Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningxia Younglight and Sichuan Teway 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 Sichuan Teway Food are associated (or correlated) with Ningxia Younglight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningxia Younglight has no effect on the direction of Sichuan Teway i.e., Sichuan Teway and Ningxia Younglight go up and down completely randomly.
Pair Corralation between Sichuan Teway and Ningxia Younglight
Assuming the 90 days trading horizon Sichuan Teway is expected to generate 1.29 times less return on investment than Ningxia Younglight. But when comparing it to its historical volatility, Sichuan Teway Food is 1.39 times less risky than Ningxia Younglight. It trades about 0.18 of its potential returns per unit of risk. Ningxia Younglight Chemicals is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 650.00 in Ningxia Younglight Chemicals on August 28, 2024 and sell it today you would earn a total of 177.00 from holding Ningxia Younglight Chemicals or generate 27.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sichuan Teway Food vs. Ningxia Younglight Chemicals
Performance |
| Timeline |
| Sichuan Teway Food |
| Ningxia Younglight |
Sichuan Teway and Ningxia Younglight Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sichuan Teway and Ningxia Younglight
The main advantage of trading using opposite Sichuan Teway and Ningxia Younglight positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sichuan Teway position performs unexpectedly, Ningxia Younglight 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 Ningxia Younglight will offset losses from the drop in Ningxia Younglight's long position.| Sichuan Teway vs. China Petroleum Chemical | Sichuan Teway vs. PetroChina Co Ltd | Sichuan Teway vs. China State Construction | Sichuan Teway vs. China Railway Group |
| Ningxia Younglight vs. Zijin Mining Group | Ningxia Younglight vs. Wanhua Chemical Group | Ningxia Younglight vs. Baoshan Iron Steel | Ningxia Younglight vs. Shandong Gold Mining |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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