Correlation Between Western Superconducting and Nantong Jiangshan
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By analyzing existing cross correlation between Western Superconducting Tech and Nantong Jiangshan Agrochemical, you can compare the effects of market volatilities on Western Superconducting and Nantong Jiangshan 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 Western Superconducting with a short position of Nantong Jiangshan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Superconducting and Nantong Jiangshan.
Diversification Opportunities for Western Superconducting and Nantong Jiangshan
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Nantong is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Western Superconducting Tech and Nantong Jiangshan Agrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nantong Jiangshan and Western Superconducting 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 Western Superconducting Tech are associated (or correlated) with Nantong Jiangshan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nantong Jiangshan has no effect on the direction of Western Superconducting i.e., Western Superconducting and Nantong Jiangshan go up and down completely randomly.
Pair Corralation between Western Superconducting and Nantong Jiangshan
Assuming the 90 days trading horizon Western Superconducting Tech is expected to generate 1.1 times more return on investment than Nantong Jiangshan. However, Western Superconducting is 1.1 times more volatile than Nantong Jiangshan Agrochemical. It trades about -0.02 of its potential returns per unit of risk. Nantong Jiangshan Agrochemical is currently generating about -0.04 per unit of risk. If you would invest 6,699 in Western Superconducting Tech on August 24, 2024 and sell it today you would lose (2,089) from holding Western Superconducting Tech or give up 31.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Superconducting Tech vs. Nantong Jiangshan Agrochemical
Performance |
| Timeline |
| Western Superconducting |
| Nantong Jiangshan |
Western Superconducting and Nantong Jiangshan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Superconducting and Nantong Jiangshan
The main advantage of trading using opposite Western Superconducting and Nantong Jiangshan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Superconducting position performs unexpectedly, Nantong Jiangshan 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 Nantong Jiangshan will offset losses from the drop in Nantong Jiangshan's long position.The idea behind Western Superconducting Tech and Nantong Jiangshan Agrochemical 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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