Correlation Between Ningbo Ligong and Beijing SPC

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

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

Diversification Opportunities for Ningbo Ligong and Beijing SPC

-0.21

Correlation Coefficient

Ningbo Ligong  Beijing SPC

Very good diversification

The 3 months correlation between Ningbo and Beijing is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Ligong Online and Beijing SPC Environment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing SPC Environment and Ningbo Ligong 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 Ligong Online are associated (or correlated) with Beijing SPC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing SPC Environment has no effect on the direction of Ningbo Ligong i.e., Ningbo Ligong and Beijing SPC go up and down completely randomly.

Pair Corralation between Ningbo Ligong and Beijing SPC

Assuming the 90 days trading horizon Ningbo Ligong Online is expected to under-perform the Beijing SPC. In addition to that, Ningbo Ligong is 1.08 times more volatile than Beijing SPC Environment. It trades about -0.06 of its total potential returns per unit of risk. Beijing SPC Environment is currently generating about 0.2 per unit of volatility. If you would invest  331.00  in Beijing SPC Environment on September 4, 2024 and sell it today you would earn a total of  108.00  from holding Beijing SPC Environment or generate 32.63% return on investment over 90 days.

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

Ningbo Ligong Online  vs.  Beijing SPC Environment

Ningbo Ligong Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ningbo Ligong Online 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.

Beijing SPC Environment

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing SPC Environment are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing SPC sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ningbo Ligong and Beijing SPC

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

The idea behind Ningbo Ligong Online and Beijing SPC Environment 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.