Correlation Between Shenyang Huitian and Ningbo GQY

Can any of the company-specific risk be diversified away by investing in both Shenyang Huitian and Ningbo GQY 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 Shenyang Huitian and Ningbo GQY into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenyang Huitian Thermal and Ningbo GQY Video, you can compare the effects of market volatilities on Shenyang Huitian and Ningbo GQY 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 Shenyang Huitian with a short position of Ningbo GQY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenyang Huitian and Ningbo GQY.

Diversification Opportunities for Shenyang Huitian and Ningbo GQY

0.71

Correlation Coefficient

Shenyang Huitian  Ningbo GQY

Poor diversification

The 3 months correlation between Shenyang and Ningbo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Shenyang Huitian Thermal and Ningbo GQY Video in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo GQY Video and Shenyang Huitian 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 Shenyang Huitian Thermal are associated (or correlated) with Ningbo GQY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo GQY Video has no effect on the direction of Shenyang Huitian i.e., Shenyang Huitian and Ningbo GQY go up and down completely randomly.

Pair Corralation between Shenyang Huitian and Ningbo GQY

Assuming the 90 days trading horizon Shenyang Huitian Thermal is expected to under-perform the Ningbo GQY. But the stock apears to be less risky and, when comparing its historical volatility, Shenyang Huitian Thermal is 1.8 times less risky than Ningbo GQY. The stock trades about -0.07 of its potential returns per unit of risk. The Ningbo GQY Video is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  723.00  in Ningbo GQY Video on December 3, 2024 and sell it today you would earn a total of  97.00  from holding Ningbo GQY Video or generate 13.42% return on investment over 90 days.

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

Shenyang Huitian Thermal  vs.  Ningbo GQY Video

Shenyang Huitian Thermal

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenyang Huitian Thermal 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.

Ningbo GQY Video

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo GQY Video are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo GQY sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Shenyang Huitian and Ningbo GQY

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

The idea behind Shenyang Huitian Thermal and Ningbo GQY Video 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.