Correlation Between Shenzhen Glory and Ningxia Building

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Shenzhen Glory and Ningxia Building 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 Shenzhen Glory and Ningxia Building into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shenzhen Glory Medical and Ningxia Building Materials, you can compare the effects of market volatilities on Shenzhen Glory and Ningxia Building 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 Shenzhen Glory with a short position of Ningxia Building. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Glory and Ningxia Building.

Diversification Opportunities for Shenzhen Glory and Ningxia Building

0.93
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Shenzhen and Ningxia is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Glory Medical and Ningxia Building Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningxia Building Mat and Shenzhen Glory 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 Shenzhen Glory Medical are associated (or correlated) with Ningxia Building. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningxia Building Mat has no effect on the direction of Shenzhen Glory i.e., Shenzhen Glory and Ningxia Building go up and down completely randomly.

Pair Corralation between Shenzhen Glory and Ningxia Building

Assuming the 90 days trading horizon Shenzhen Glory is expected to generate 1.39 times less return on investment than Ningxia Building. But when comparing it to its historical volatility, Shenzhen Glory Medical is 1.05 times less risky than Ningxia Building. It trades about 0.19 of its potential returns per unit of risk. Ningxia Building Materials is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  913.00  in Ningxia Building Materials on September 10, 2024 and sell it today you would earn a total of  585.00  from holding Ningxia Building Materials or generate 64.07% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Shenzhen Glory Medical  vs.  Ningxia Building Materials

 Performance 
       Timeline  
Shenzhen Glory Medical 

Risk-Adjusted Performance

15 of 100

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

Risk-Adjusted Performance

20 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Ningxia Building Materials are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningxia Building sustained solid returns over the last few months and may actually be approaching a breakup point.

Shenzhen Glory and Ningxia Building Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Shenzhen Glory and Ningxia Building

The main advantage of trading using opposite Shenzhen Glory and Ningxia Building positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenzhen Glory position performs unexpectedly, Ningxia Building 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 Ningxia Building will offset losses from the drop in Ningxia Building's long position.
The idea behind Shenzhen Glory Medical and Ningxia Building 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.
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

Other Complementary Tools

Content Syndication
Quickly integrate customizable finance content to your own investment portal
Top Crypto Exchanges
Search and analyze digital assets across top global cryptocurrency exchanges
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
My Watchlist Analysis
Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like