Correlation Between Gifore Agricultural and Ningbo Ligong

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

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

Diversification Opportunities for Gifore Agricultural and Ningbo Ligong

0.85

Correlation Coefficient

Gifore Agricultural  Ningbo Ligong

Very poor diversification

The 3 months correlation between Gifore and Ningbo is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Gifore Agricultural Machinery and Ningbo Ligong Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Ligong Online and Gifore Agricultural 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 Gifore Agricultural Machinery are associated (or correlated) with Ningbo Ligong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Ligong Online has no effect on the direction of Gifore Agricultural i.e., Gifore Agricultural and Ningbo Ligong go up and down completely randomly.

Pair Corralation between Gifore Agricultural and Ningbo Ligong

Assuming the 90 days trading horizon Gifore Agricultural Machinery is expected to generate 1.95 times more return on investment than Ningbo Ligong. However, Gifore Agricultural is 1.95 times more volatile than Ningbo Ligong Online. It trades about 0.16 of its potential returns per unit of risk. Ningbo Ligong Online is currently generating about 0.08 per unit of risk. If you would invest  501.00  in Gifore Agricultural Machinery on December 25, 2024 and sell it today you would earn a total of  188.00  from holding Gifore Agricultural Machinery or generate 37.52% return on investment over 90 days.

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

Gifore Agricultural Machinery  vs.  Ningbo Ligong Online

Gifore Agricultural

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Gifore Agricultural Machinery are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gifore Agricultural sustained solid returns over the last few months and may actually be approaching a breakup point.

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 6 (%) 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.

Pair Trading with Gifore Agricultural and Ningbo Ligong

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

The idea behind Gifore Agricultural Machinery and Ningbo Ligong Online 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.