Correlation Between ShenZhen Yitoa and Ningbo Ligong

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

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

Diversification Opportunities for ShenZhen Yitoa and Ningbo Ligong

0.37

Correlation Coefficient

ShenZhen Yitoa  Ningbo Ligong

Weak diversification

The 3 months correlation between ShenZhen and Ningbo is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding ShenZhen Yitoa Intelligent 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 ShenZhen Yitoa 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 Yitoa Intelligent 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 ShenZhen Yitoa i.e., ShenZhen Yitoa and Ningbo Ligong go up and down completely randomly.

Pair Corralation between ShenZhen Yitoa and Ningbo Ligong

Assuming the 90 days trading horizon ShenZhen Yitoa is expected to generate 1.64 times less return on investment than Ningbo Ligong. In addition to that, ShenZhen Yitoa is 1.72 times more volatile than Ningbo Ligong Online. It trades about 0.03 of its total potential returns per unit of risk. Ningbo Ligong Online is currently generating about 0.07 per unit of volatility. If you would invest  1,291  in Ningbo Ligong Online on December 26, 2024 and sell it today you would earn a total of  99.00  from holding Ningbo Ligong Online or generate 7.67% return on investment over 90 days.

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

ShenZhen Yitoa Intelligent  vs.  Ningbo Ligong Online

ShenZhen Yitoa Intel

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ShenZhen Yitoa Intelligent are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, ShenZhen Yitoa is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with ShenZhen Yitoa and Ningbo Ligong

The main advantage of trading using opposite ShenZhen Yitoa and Ningbo Ligong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ShenZhen Yitoa 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 ShenZhen Yitoa Intelligent 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.