Correlation Between Road Environment and Ningbo Kangqiang
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By analyzing existing cross correlation between Road Environment Technology and Ningbo Kangqiang Electronics, you can compare the effects of market volatilities on Road Environment and Ningbo Kangqiang 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 Road Environment with a short position of Ningbo Kangqiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Road Environment and Ningbo Kangqiang.
Diversification Opportunities for Road Environment and Ningbo Kangqiang
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Road and Ningbo is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Road Environment Technology and Ningbo Kangqiang Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Kangqiang Ele and Road Environment 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 Road Environment Technology are associated (or correlated) with Ningbo Kangqiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Kangqiang Ele has no effect on the direction of Road Environment i.e., Road Environment and Ningbo Kangqiang go up and down completely randomly.
Pair Corralation between Road Environment and Ningbo Kangqiang
Assuming the 90 days trading horizon Road Environment Technology is expected to under-perform the Ningbo Kangqiang. But the stock apears to be less risky and, when comparing its historical volatility, Road Environment Technology is 1.18 times less risky than Ningbo Kangqiang. The stock trades about -0.02 of its potential returns per unit of risk. The Ningbo Kangqiang Electronics is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 960.00 in Ningbo Kangqiang Electronics on November 8, 2024 and sell it today you would earn a total of 940.00 from holding Ningbo Kangqiang Electronics or generate 97.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Road Environment Technology vs. Ningbo Kangqiang Electronics
Performance |
| Timeline |
| Road Environment Tec |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Ningbo Kangqiang Ele |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Road Environment and Ningbo Kangqiang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Road Environment and Ningbo Kangqiang
The main advantage of trading using opposite Road Environment and Ningbo Kangqiang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Road Environment position performs unexpectedly, Ningbo Kangqiang 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 Ningbo Kangqiang will offset losses from the drop in Ningbo Kangqiang's long position.The idea behind Road Environment Technology and Ningbo Kangqiang Electronics 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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