Correlation Between Shenyang Blue and Ningbo Tip

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

By analyzing existing cross correlation between Shenyang Blue Silver and Ningbo Tip Rubber, you can compare the effects of market volatilities on Shenyang Blue and Ningbo Tip 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 Shenyang Blue with a short position of Ningbo Tip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenyang Blue and Ningbo Tip.

Diversification Opportunities for Shenyang Blue and Ningbo Tip

0.29

Correlation Coefficient

Shenyang Blue  Ningbo Tip

Modest diversification

The 3 months correlation between Shenyang and Ningbo is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Shenyang Blue Silver and Ningbo Tip Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Tip Rubber and Shenyang Blue 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 Shenyang Blue Silver are associated (or correlated) with Ningbo Tip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Tip Rubber has no effect on the direction of Shenyang Blue i.e., Shenyang Blue and Ningbo Tip go up and down completely randomly.

Pair Corralation between Shenyang Blue and Ningbo Tip

Assuming the 90 days trading horizon Shenyang Blue Silver is expected to generate 1.54 times more return on investment than Ningbo Tip. However, Shenyang Blue is 1.54 times more volatile than Ningbo Tip Rubber. It trades about 0.05 of its potential returns per unit of risk. Ningbo Tip Rubber is currently generating about 0.01 per unit of risk. If you would invest  1,162  in Shenyang Blue Silver on October 24, 2024 and sell it today you would earn a total of  1,077  from holding Shenyang Blue Silver or generate 92.69% return on investment over 90 days.

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

Shenyang Blue Silver  vs.  Ningbo Tip Rubber

Shenyang Blue Silver

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shenyang Blue Silver has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ningbo Tip Rubber

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Tip Rubber are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Tip may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Shenyang Blue and Ningbo Tip

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

The idea behind Shenyang Blue Silver and Ningbo Tip Rubber 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.