Correlation Between Chongqing Machinery and Nishi Nippon
Can any of the company-specific risk be diversified away by investing in both Chongqing Machinery and Nishi Nippon at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Chongqing Machinery and Nishi Nippon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chongqing Machinery Electric and Nishi Nippon Railroad Co, you can compare the effects of market volatilities on Chongqing Machinery and Nishi Nippon 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 Chongqing Machinery with a short position of Nishi Nippon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Machinery and Nishi Nippon.
Diversification Opportunities for Chongqing Machinery and Nishi Nippon
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Chongqing and Nishi is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Machinery Electric and Nishi Nippon Railroad Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nishi Nippon Railroad and Chongqing Machinery 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 Chongqing Machinery Electric are associated (or correlated) with Nishi Nippon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nishi Nippon Railroad has no effect on the direction of Chongqing Machinery i.e., Chongqing Machinery and Nishi Nippon go up and down completely randomly.
Pair Corralation between Chongqing Machinery and Nishi Nippon
Assuming the 90 days horizon Chongqing Machinery Electric is expected to generate 2.45 times more return on investment than Nishi Nippon. However, Chongqing Machinery is 2.45 times more volatile than Nishi Nippon Railroad Co. It trades about 0.07 of its potential returns per unit of risk. Nishi Nippon Railroad Co is currently generating about 0.02 per unit of risk. If you would invest 2.05 in Chongqing Machinery Electric on August 29, 2024 and sell it today you would earn a total of 5.40 from holding Chongqing Machinery Electric or generate 263.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Chongqing Machinery Electric vs. Nishi Nippon Railroad Co
Performance |
| Timeline |
| Chongqing Machinery |
| Nishi Nippon Railroad |
Chongqing Machinery and Nishi Nippon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chongqing Machinery and Nishi Nippon
The main advantage of trading using opposite Chongqing Machinery and Nishi Nippon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chongqing Machinery position performs unexpectedly, Nishi Nippon 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 Nishi Nippon will offset losses from the drop in Nishi Nippon's long position.| Chongqing Machinery vs. Gold Road Resources | Chongqing Machinery vs. Texas Roadhouse | Chongqing Machinery vs. EVS Broadcast Equipment | Chongqing Machinery vs. Luckin Coffee |
| Nishi Nippon vs. Union Pacific | Nishi Nippon vs. Westinghouse Air Brake | Nishi Nippon vs. Superior Plus Corp | Nishi Nippon vs. NMI Holdings |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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