Correlation Between Ningbo Tip and Loongson Technology
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By analyzing existing cross correlation between Ningbo Tip Rubber and Loongson Technology Corp, you can compare the effects of market volatilities on Ningbo Tip and Loongson Technology 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 Loongson Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Tip and Loongson Technology.
Diversification Opportunities for Ningbo Tip and Loongson Technology
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Ningbo and Loongson is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Tip Rubber and Loongson Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loongson Technology Corp 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 Loongson Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loongson Technology Corp has no effect on the direction of Ningbo Tip i.e., Ningbo Tip and Loongson Technology go up and down completely randomly.
Pair Corralation between Ningbo Tip and Loongson Technology
Assuming the 90 days trading horizon Ningbo Tip is expected to generate 2.6 times less return on investment than Loongson Technology. But when comparing it to its historical volatility, Ningbo Tip Rubber is 1.4 times less risky than Loongson Technology. It trades about 0.04 of its potential returns per unit of risk. Loongson Technology Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 13,835 in Loongson Technology Corp on August 28, 2024 and sell it today you would earn a total of 773.00 from holding Loongson Technology Corp or generate 5.59% 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. Loongson Technology Corp
Performance |
| Timeline |
| Ningbo Tip Rubber |
| Loongson Technology Corp |
Ningbo Tip and Loongson Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ningbo Tip and Loongson Technology
The main advantage of trading using opposite Ningbo Tip and Loongson Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo Tip position performs unexpectedly, Loongson Technology 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 Loongson Technology will offset losses from the drop in Loongson Technology's long position.| Ningbo Tip vs. Loongson Technology Corp | Ningbo Tip vs. Chongqing Road Bridge | Ningbo Tip vs. Shenzhen Fortune Trend | Ningbo Tip vs. Wuhan Xianglong Power |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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