Correlation Between Ningxia Younglight and Chison Medical

Can any of the company-specific risk be diversified away by investing in both Ningxia Younglight and Chison Medical 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 Chison Medical 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 Chison Medical Technologies, you can compare the effects of market volatilities on Ningxia Younglight and Chison Medical 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 Chison Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningxia Younglight and Chison Medical.

Diversification Opportunities for Ningxia Younglight and Chison Medical

0.77

Correlation Coefficient

Ningxia Younglight  Chison Medical

Poor diversification

The 3 months correlation between Ningxia and Chison is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Ningxia Younglight Chemicals and Chison Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chison Medical Techn 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 Chison Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chison Medical Techn has no effect on the direction of Ningxia Younglight i.e., Ningxia Younglight and Chison Medical go up and down completely randomly.

Pair Corralation between Ningxia Younglight and Chison Medical

Assuming the 90 days trading horizon Ningxia Younglight Chemicals is expected to generate 0.91 times more return on investment than Chison Medical. However, Ningxia Younglight Chemicals is 1.1 times less risky than Chison Medical. It trades about 0.01 of its potential returns per unit of risk. Chison Medical Technologies is currently generating about 0.0 per unit of risk. If you would invest  919.00  in Ningxia Younglight Chemicals on September 16, 2024 and sell it today you would lose (62.00) from holding Ningxia Younglight Chemicals or give up 6.75% of portfolio value over 90 days.

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

Ningxia Younglight Chemicals  vs.  Chison Medical Technologies

Ningxia Younglight

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ningxia Younglight Chemicals are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningxia Younglight sustained solid returns over the last few months and may actually be approaching a breakup point.

Chison Medical Techn

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chison Medical Technologies are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Chison Medical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ningxia Younglight and Chison Medical

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

The idea behind Ningxia Younglight Chemicals and Chison Medical Technologies 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.