Correlation Between Bus Online and Ningbo Fujia

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

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

Diversification Opportunities for Bus Online and Ningbo Fujia

0.58

Correlation Coefficient

Bus Online  Ningbo Fujia

Very weak diversification

The 3 months correlation between Bus and Ningbo is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Bus Online Co and Ningbo Fujia Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Fujia Industrial and Bus Online 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 Bus Online Co are associated (or correlated) with Ningbo Fujia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Fujia Industrial has no effect on the direction of Bus Online i.e., Bus Online and Ningbo Fujia go up and down completely randomly.

Pair Corralation between Bus Online and Ningbo Fujia

Assuming the 90 days trading horizon Bus Online Co is expected to under-perform the Ningbo Fujia. In addition to that, Bus Online is 1.07 times more volatile than Ningbo Fujia Industrial. It trades about -0.1 of its total potential returns per unit of risk. Ningbo Fujia Industrial is currently generating about 0.23 per unit of volatility. If you would invest  1,268  in Ningbo Fujia Industrial on September 28, 2024 and sell it today you would earn a total of  224.00  from holding Ningbo Fujia Industrial or generate 17.67% return on investment over 90 days.

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

Bus Online Co  vs.  Ningbo Fujia Industrial

Bus Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bus Online Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Ningbo Fujia Industrial

Risk-Adjusted Performance

2 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Fujia Industrial are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Fujia may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bus Online and Ningbo Fujia

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

The idea behind Bus Online Co and Ningbo Fujia Industrial 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.