Correlation Between Dazhong Transportation and Ningbo Fujia
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By analyzing existing cross correlation between Dazhong Transportation Group and Ningbo Fujia Industrial, you can compare the effects of market volatilities on Dazhong Transportation and Ningbo Fujia 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 Dazhong Transportation with a short position of Ningbo Fujia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dazhong Transportation and Ningbo Fujia.
Diversification Opportunities for Dazhong Transportation and Ningbo Fujia
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Dazhong and Ningbo is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Dazhong Transportation Group and Ningbo Fujia Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Fujia Industrial and Dazhong Transportation 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 Dazhong Transportation Group are associated (or correlated) with Ningbo Fujia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Fujia Industrial has no effect on the direction of Dazhong Transportation i.e., Dazhong Transportation and Ningbo Fujia go up and down completely randomly.
Pair Corralation between Dazhong Transportation and Ningbo Fujia
Assuming the 90 days trading horizon Dazhong Transportation is expected to generate 1.09 times less return on investment than Ningbo Fujia. But when comparing it to its historical volatility, Dazhong Transportation Group is 1.19 times less risky than Ningbo Fujia. It trades about 0.02 of its potential returns per unit of risk. Ningbo Fujia Industrial is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,261 in Ningbo Fujia Industrial on October 16, 2024 and sell it today you would earn a total of 73.00 from holding Ningbo Fujia Industrial or generate 5.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dazhong Transportation Group vs. Ningbo Fujia Industrial
Performance |
| Timeline |
| Dazhong Transportation |
| Ningbo Fujia Industrial |
Dazhong Transportation and Ningbo Fujia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dazhong Transportation and Ningbo Fujia
The main advantage of trading using opposite Dazhong Transportation and Ningbo Fujia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dazhong Transportation position performs unexpectedly, Ningbo Fujia 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 Fujia will offset losses from the drop in Ningbo Fujia's long position.The idea behind Dazhong Transportation Group and Ningbo Fujia Industrial 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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