Correlation Between Heilongjiang Publishing and Ningxia Building
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By analyzing existing cross correlation between Heilongjiang Publishing Media and Ningxia Building Materials, you can compare the effects of market volatilities on Heilongjiang Publishing and Ningxia Building 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 Heilongjiang Publishing with a short position of Ningxia Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heilongjiang Publishing and Ningxia Building.
Diversification Opportunities for Heilongjiang Publishing and Ningxia Building
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Heilongjiang and Ningxia is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Heilongjiang Publishing Media and Ningxia Building Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningxia Building Mat and Heilongjiang Publishing 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 Heilongjiang Publishing Media are associated (or correlated) with Ningxia Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningxia Building Mat has no effect on the direction of Heilongjiang Publishing i.e., Heilongjiang Publishing and Ningxia Building go up and down completely randomly.
Pair Corralation between Heilongjiang Publishing and Ningxia Building
Assuming the 90 days trading horizon Heilongjiang Publishing Media is expected to under-perform the Ningxia Building. But the stock apears to be less risky and, when comparing its historical volatility, Heilongjiang Publishing Media is 1.0 times less risky than Ningxia Building. The stock trades about -0.24 of its potential returns per unit of risk. The Ningxia Building Materials is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 1,489 in Ningxia Building Materials on October 25, 2024 and sell it today you would lose (137.00) from holding Ningxia Building Materials or give up 9.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Heilongjiang Publishing Media vs. Ningxia Building Materials
Performance |
| Timeline |
| Heilongjiang Publishing |
| Ningxia Building Mat |
Heilongjiang Publishing and Ningxia Building Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Heilongjiang Publishing and Ningxia Building
The main advantage of trading using opposite Heilongjiang Publishing and Ningxia Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heilongjiang Publishing position performs unexpectedly, Ningxia Building 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 Building will offset losses from the drop in Ningxia Building's long position.The idea behind Heilongjiang Publishing Media and Ningxia Building Materials 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.
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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