Correlation Between Ningbo Tech and Shanghai Yaoji

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

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

Diversification Opportunities for Ningbo Tech and Shanghai Yaoji

0.67

Correlation Coefficient

Ningbo Tech  Shanghai Yaoji

Poor diversification

The 3 months correlation between Ningbo and Shanghai is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Tech Bank Co and Shanghai Yaoji Playing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shanghai Yaoji Playing and Ningbo Tech 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 Ningbo Tech Bank Co are associated (or correlated) with Shanghai Yaoji. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shanghai Yaoji Playing has no effect on the direction of Ningbo Tech i.e., Ningbo Tech and Shanghai Yaoji go up and down completely randomly.

Pair Corralation between Ningbo Tech and Shanghai Yaoji

Assuming the 90 days trading horizon Ningbo Tech Bank Co is expected to under-perform the Shanghai Yaoji. But the stock apears to be less risky and, when comparing its historical volatility, Ningbo Tech Bank Co is 1.16 times less risky than Shanghai Yaoji. The stock trades about -0.03 of its potential returns per unit of risk. The Shanghai Yaoji Playing is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,401  in Shanghai Yaoji Playing on October 6, 2024 and sell it today you would earn a total of  94.00  from holding Shanghai Yaoji Playing or generate 3.92% return on investment over 90 days.

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

Ningbo Tech Bank Co  vs.  Shanghai Yaoji Playing

Ningbo Tech Bank

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Tech Bank Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Tech sustained solid returns over the last few months and may actually be approaching a breakup point.

Shanghai Yaoji Playing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanghai Yaoji Playing has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shanghai Yaoji is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ningbo Tech and Shanghai Yaoji

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

The idea behind Ningbo Tech Bank Co and Shanghai Yaoji Playing 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 CEOs Directory module to screen CEOs from public companies around the world.