Correlation Between Ningbo Ligong and Beijing Seeyon

Can any of the company-specific risk be diversified away by investing in both Ningbo Ligong and Beijing Seeyon 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 Seeyon 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 Seeyon Internet, you can compare the effects of market volatilities on Ningbo Ligong and Beijing Seeyon 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 Seeyon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Ligong and Beijing Seeyon.

Diversification Opportunities for Ningbo Ligong and Beijing Seeyon

0.91

Correlation Coefficient

Ningbo Ligong  Beijing Seeyon

Almost no diversification

The 3 months correlation between Ningbo and Beijing is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Ligong Online and Beijing Seeyon Internet in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing Seeyon Internet 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 Seeyon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing Seeyon Internet has no effect on the direction of Ningbo Ligong i.e., Ningbo Ligong and Beijing Seeyon go up and down completely randomly.

Pair Corralation between Ningbo Ligong and Beijing Seeyon

Assuming the 90 days trading horizon Ningbo Ligong is expected to generate 6.22 times less return on investment than Beijing Seeyon. But when comparing it to its historical volatility, Ningbo Ligong Online is 2.74 times less risky than Beijing Seeyon. It trades about 0.08 of its potential returns per unit of risk. Beijing Seeyon Internet is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,122  in Beijing Seeyon Internet on December 25, 2024 and sell it today you would earn a total of  1,317  from holding Beijing Seeyon Internet or generate 62.06% return on investment over 90 days.

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

Ningbo Ligong Online  vs.  Beijing Seeyon Internet

Ningbo Ligong Online

Risk-Adjusted Performance

Modest

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

Beijing Seeyon Internet

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Beijing Seeyon Internet are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Beijing Seeyon sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ningbo Ligong and Beijing Seeyon

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

The idea behind Ningbo Ligong Online and Beijing Seeyon Internet 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.