Correlation Between Ningbo Tech-Bank and China Asset

Can any of the company-specific risk be diversified away by investing in both Ningbo Tech-Bank and China Asset 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-Bank and China Asset 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 China Asset Management, you can compare the effects of market volatilities on Ningbo Tech-Bank and China Asset 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-Bank with a short position of China Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Tech-Bank and China Asset.

Diversification Opportunities for Ningbo Tech-Bank and China Asset

-0.08

Correlation Coefficient

Ningbo Tech-Bank  China Asset

Good diversification

The 3 months correlation between Ningbo and China is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Tech Bank Co and China Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Asset Management and Ningbo Tech-Bank 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 China Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Asset Management has no effect on the direction of Ningbo Tech-Bank i.e., Ningbo Tech-Bank and China Asset go up and down completely randomly.

Pair Corralation between Ningbo Tech-Bank and China Asset

Assuming the 90 days trading horizon Ningbo Tech-Bank is expected to generate 1.08 times less return on investment than China Asset. In addition to that, Ningbo Tech-Bank is 1.58 times more volatile than China Asset Management. It trades about 0.07 of its total potential returns per unit of risk. China Asset Management is currently generating about 0.12 per unit of volatility. If you would invest  353.00  in China Asset Management on December 24, 2024 and sell it today you would earn a total of  30.00  from holding China Asset Management or generate 8.5% return on investment over 90 days.

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

Ningbo Tech Bank Co  vs.  China Asset Management

Ningbo Tech Bank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Tech Bank Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Tech-Bank may actually be approaching a critical reversion point that can send shares even higher in April 2025.

China Asset Management

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in China Asset Management are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, China Asset may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ningbo Tech-Bank and China Asset

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

The idea behind Ningbo Tech Bank Co and China Asset Management 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.