Correlation Between Ningbo GQY and Cultural Investment

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

By analyzing existing cross correlation between Ningbo GQY Video and Cultural Investment Holdings, you can compare the effects of market volatilities on Ningbo GQY and Cultural Investment 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 GQY with a short position of Cultural Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo GQY and Cultural Investment.

Diversification Opportunities for Ningbo GQY and Cultural Investment

0.3

Correlation Coefficient

Ningbo GQY  Cultural Investment

Weak diversification

The 3 months correlation between Ningbo and Cultural is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo GQY Video and Cultural Investment Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cultural Investment and Ningbo GQY 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 GQY Video are associated (or correlated) with Cultural Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cultural Investment has no effect on the direction of Ningbo GQY i.e., Ningbo GQY and Cultural Investment go up and down completely randomly.

Pair Corralation between Ningbo GQY and Cultural Investment

Assuming the 90 days trading horizon Ningbo GQY Video is expected to generate 2.7 times more return on investment than Cultural Investment. However, Ningbo GQY is 2.7 times more volatile than Cultural Investment Holdings. It trades about 0.05 of its potential returns per unit of risk. Cultural Investment Holdings is currently generating about -0.04 per unit of risk. If you would invest  753.00  in Ningbo GQY Video on December 28, 2024 and sell it today you would earn a total of  60.00  from holding Ningbo GQY Video or generate 7.97% return on investment over 90 days.

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

Ningbo GQY Video  vs.  Cultural Investment Holdings

Ningbo GQY Video

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo GQY Video are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo GQY sustained solid returns over the last few months and may actually be approaching a breakup point.

Cultural Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cultural Investment Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Cultural Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ningbo GQY and Cultural Investment

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

The idea behind Ningbo GQY Video and Cultural Investment Holdings 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.