Correlation Between Shanxi Tond and Ningbo Construction
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By analyzing existing cross correlation between Shanxi Tond Chemical and Ningbo Construction Co, you can compare the effects of market volatilities on Shanxi Tond and Ningbo Construction 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 Shanxi Tond with a short position of Ningbo Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanxi Tond and Ningbo Construction.
Diversification Opportunities for Shanxi Tond and Ningbo Construction
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shanxi and Ningbo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Shanxi Tond Chemical and Ningbo Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Construction and Shanxi Tond 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 Shanxi Tond Chemical are associated (or correlated) with Ningbo Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Construction has no effect on the direction of Shanxi Tond i.e., Shanxi Tond and Ningbo Construction go up and down completely randomly.
Pair Corralation between Shanxi Tond and Ningbo Construction
Assuming the 90 days trading horizon Shanxi Tond Chemical is expected to under-perform the Ningbo Construction. But the stock apears to be less risky and, when comparing its historical volatility, Shanxi Tond Chemical is 1.4 times less risky than Ningbo Construction. The stock trades about -0.04 of its potential returns per unit of risk. The Ningbo Construction Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 428.00 in Ningbo Construction Co on October 27, 2024 and sell it today you would lose (11.00) from holding Ningbo Construction Co or give up 2.57% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 98.46% |
Values | Daily Returns |
Shanxi Tond Chemical vs. Ningbo Construction Co
Performance |
Timeline |
Shanxi Tond Chemical |
Ningbo Construction |
Shanxi Tond and Ningbo Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Shanxi Tond and Ningbo Construction
The main advantage of trading using opposite Shanxi Tond and Ningbo Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shanxi Tond position performs unexpectedly, Ningbo Construction 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 Construction will offset losses from the drop in Ningbo Construction's long position.Shanxi Tond vs. Tangel Publishing | ||
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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