Correlation Between Yunnan Xiyi and NBTM New

Can any of the company-specific risk be diversified away by investing in both Yunnan Xiyi and NBTM New 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 Yunnan Xiyi and NBTM New into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yunnan Xiyi Industrial and NBTM New Materials, you can compare the effects of market volatilities on Yunnan Xiyi and NBTM New 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 Yunnan Xiyi with a short position of NBTM New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yunnan Xiyi and NBTM New.

Diversification Opportunities for Yunnan Xiyi and NBTM New

0.25

Correlation Coefficient

Yunnan Xiyi  NBTM New

Modest diversification

The 3 months correlation between Yunnan and NBTM is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Yunnan Xiyi Industrial and NBTM New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBTM New Materials and Yunnan Xiyi 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 Yunnan Xiyi Industrial are associated (or correlated) with NBTM New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBTM New Materials has no effect on the direction of Yunnan Xiyi i.e., Yunnan Xiyi and NBTM New go up and down completely randomly.

Pair Corralation between Yunnan Xiyi and NBTM New

Assuming the 90 days trading horizon Yunnan Xiyi Industrial is expected to generate 1.44 times more return on investment than NBTM New. However, Yunnan Xiyi is 1.44 times more volatile than NBTM New Materials. It trades about 0.3 of its potential returns per unit of risk. NBTM New Materials is currently generating about 0.09 per unit of risk. If you would invest  906.00  in Yunnan Xiyi Industrial on September 20, 2024 and sell it today you would earn a total of  1,201  from holding Yunnan Xiyi Industrial or generate 132.56% return on investment over 90 days.

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

Yunnan Xiyi Industrial  vs.  NBTM New Materials

Yunnan Xiyi Industrial

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Yunnan Xiyi Industrial are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yunnan Xiyi sustained solid returns over the last few months and may actually be approaching a breakup point.

NBTM New Materials

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NBTM New Materials are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NBTM New sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Yunnan Xiyi and NBTM New

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

The idea behind Yunnan Xiyi Industrial and NBTM New Materials 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.