Correlation Between Unisplendour Corp and Ningbo Construction

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

By analyzing existing cross correlation between Unisplendour Corp and Ningbo Construction Co, you can compare the effects of market volatilities on Unisplendour Corp and Ningbo Construction 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 Unisplendour Corp with a short position of Ningbo Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Unisplendour Corp and Ningbo Construction.

Diversification Opportunities for Unisplendour Corp and Ningbo Construction

0.23

Correlation Coefficient

Unisplendour Corp  Ningbo Construction

Modest diversification

The 3 months correlation between Unisplendour and Ningbo is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Unisplendour Corp and Ningbo Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Construction and Unisplendour Corp 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 Unisplendour Corp are associated (or correlated) with Ningbo Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Construction has no effect on the direction of Unisplendour Corp i.e., Unisplendour Corp and Ningbo Construction go up and down completely randomly.

Pair Corralation between Unisplendour Corp and Ningbo Construction

Assuming the 90 days trading horizon Unisplendour Corp is expected to generate 0.95 times more return on investment than Ningbo Construction. However, Unisplendour Corp is 1.06 times less risky than Ningbo Construction. It trades about 0.06 of its potential returns per unit of risk. Ningbo Construction Co is currently generating about -0.18 per unit of risk. If you would invest  2,498  in Unisplendour Corp on October 11, 2024 and sell it today you would earn a total of  76.00  from holding Unisplendour Corp or generate 3.04% return on investment over 90 days.

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

Unisplendour Corp  vs.  Ningbo Construction Co

Unisplendour Corp

Risk-Adjusted Performance

5 of 100

Insignificant

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

Ningbo Construction

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Construction Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Construction may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Unisplendour Corp and Ningbo Construction

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

The idea behind Unisplendour Corp and Ningbo Construction 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..