Correlation Between Nanjing OLO and China Longyuan
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By analyzing existing cross correlation between Nanjing OLO Home and China Longyuan Power, you can compare the effects of market volatilities on Nanjing OLO and China Longyuan 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 Nanjing OLO with a short position of China Longyuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanjing OLO and China Longyuan.
Diversification Opportunities for Nanjing OLO and China Longyuan
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nanjing and China is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing OLO Home and China Longyuan Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Longyuan Power and Nanjing OLO 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 Nanjing OLO Home are associated (or correlated) with China Longyuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Longyuan Power has no effect on the direction of Nanjing OLO i.e., Nanjing OLO and China Longyuan go up and down completely randomly.
Pair Corralation between Nanjing OLO and China Longyuan
Assuming the 90 days trading horizon Nanjing OLO Home is expected to generate 1.31 times more return on investment than China Longyuan. However, Nanjing OLO is 1.31 times more volatile than China Longyuan Power. It trades about 0.17 of its potential returns per unit of risk. China Longyuan Power is currently generating about -0.35 per unit of risk. If you would invest 644.00 in Nanjing OLO Home on September 12, 2024 and sell it today you would earn a total of 42.00 from holding Nanjing OLO Home or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nanjing OLO Home vs. China Longyuan Power
Performance |
| Timeline |
| Nanjing OLO Home |
| China Longyuan Power |
Nanjing OLO and China Longyuan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanjing OLO and China Longyuan
The main advantage of trading using opposite Nanjing OLO and China Longyuan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanjing OLO position performs unexpectedly, China Longyuan 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 China Longyuan will offset losses from the drop in China Longyuan's long position.| Nanjing OLO vs. Lutian Machinery Co | Nanjing OLO vs. PetroChina Co Ltd | Nanjing OLO vs. Bank of China | Nanjing OLO vs. Gansu Jiu Steel |
| China Longyuan vs. Gansu Jiu Steel | China Longyuan vs. Shandong Mining Machinery | China Longyuan vs. Aba Chemicals Corp | China Longyuan vs. BlueFocus Communication Group |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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