Correlation Between Ningbo Tip and Xiamen Goldenhome
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By analyzing existing cross correlation between Ningbo Tip Rubber and Xiamen Goldenhome Co, you can compare the effects of market volatilities on Ningbo Tip and Xiamen Goldenhome 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 Tip with a short position of Xiamen Goldenhome. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Tip and Xiamen Goldenhome.
Diversification Opportunities for Ningbo Tip and Xiamen Goldenhome
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ningbo and Xiamen is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Tip Rubber and Xiamen Goldenhome Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xiamen Goldenhome and Ningbo Tip 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 Tip Rubber are associated (or correlated) with Xiamen Goldenhome. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xiamen Goldenhome has no effect on the direction of Ningbo Tip i.e., Ningbo Tip and Xiamen Goldenhome go up and down completely randomly.
Pair Corralation between Ningbo Tip and Xiamen Goldenhome
Assuming the 90 days trading horizon Ningbo Tip Rubber is expected to generate 1.38 times more return on investment than Xiamen Goldenhome. However, Ningbo Tip is 1.38 times more volatile than Xiamen Goldenhome Co. It trades about 0.28 of its potential returns per unit of risk. Xiamen Goldenhome Co is currently generating about 0.22 per unit of risk. If you would invest 1,180 in Ningbo Tip Rubber on November 7, 2024 and sell it today you would earn a total of 126.00 from holding Ningbo Tip Rubber or generate 10.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ningbo Tip Rubber vs. Xiamen Goldenhome Co
Performance |
| Timeline |
| Ningbo Tip Rubber |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Xiamen Goldenhome |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ningbo Tip and Xiamen Goldenhome Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningbo Tip and Xiamen Goldenhome
The main advantage of trading using opposite Ningbo Tip and Xiamen Goldenhome positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo Tip position performs unexpectedly, Xiamen Goldenhome 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 Xiamen Goldenhome will offset losses from the drop in Xiamen Goldenhome's long position.The idea behind Ningbo Tip Rubber and Xiamen Goldenhome Co 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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