Correlation Between Ningxia Younglight and Ciwen Media

Can any of the company-specific risk be diversified away by investing in both Ningxia Younglight and Ciwen Media 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 Ningxia Younglight and Ciwen Media into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ningxia Younglight Chemicals and Ciwen Media Co, you can compare the effects of market volatilities on Ningxia Younglight and Ciwen Media 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 Ningxia Younglight with a short position of Ciwen Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningxia Younglight and Ciwen Media.

Diversification Opportunities for Ningxia Younglight and Ciwen Media

0.42

Correlation Coefficient

Ningxia Younglight  Ciwen Media

Very weak diversification

The 3 months correlation between Ningxia and Ciwen is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Ningxia Younglight Chemicals and Ciwen Media Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ciwen Media and Ningxia Younglight 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 Ningxia Younglight Chemicals are associated (or correlated) with Ciwen Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ciwen Media has no effect on the direction of Ningxia Younglight i.e., Ningxia Younglight and Ciwen Media go up and down completely randomly.

Pair Corralation between Ningxia Younglight and Ciwen Media

Assuming the 90 days trading horizon Ningxia Younglight Chemicals is expected to under-perform the Ciwen Media. But the stock apears to be less risky and, when comparing its historical volatility, Ningxia Younglight Chemicals is 1.53 times less risky than Ciwen Media. The stock trades about -0.1 of its potential returns per unit of risk. The Ciwen Media Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  653.00  in Ciwen Media Co on December 24, 2024 and sell it today you would earn a total of  49.00  from holding Ciwen Media Co or generate 7.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Ningxia Younglight Chemicals  vs.  Ciwen Media Co

Ningxia Younglight

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ningxia Younglight Chemicals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ciwen Media

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ciwen Media Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ciwen Media may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ningxia Younglight and Ciwen Media

The main advantage of trading using opposite Ningxia Younglight and Ciwen Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningxia Younglight position performs unexpectedly, Ciwen Media 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 Ciwen Media will offset losses from the drop in Ciwen Media's long position.

The idea behind Ningxia Younglight Chemicals and Ciwen Media Co 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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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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.