Correlation Between Ningbo MedicalSystem and Sinofibers Technology

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Can any of the company-specific risk be diversified away by investing in both Ningbo MedicalSystem and Sinofibers Technology 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 MedicalSystem and Sinofibers Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ningbo MedicalSystem Biotechnology and Sinofibers Technology Co, you can compare the effects of market volatilities on Ningbo MedicalSystem and Sinofibers Technology 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 MedicalSystem with a short position of Sinofibers Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo MedicalSystem and Sinofibers Technology.

Diversification Opportunities for Ningbo MedicalSystem and Sinofibers Technology

NingboSinofibersDiversified AwayNingboSinofibersDiversified Away100%
0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ningbo and Sinofibers is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo MedicalSystem Biotechno and Sinofibers Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinofibers Technology and Ningbo MedicalSystem 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 MedicalSystem Biotechnology are associated (or correlated) with Sinofibers Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinofibers Technology has no effect on the direction of Ningbo MedicalSystem i.e., Ningbo MedicalSystem and Sinofibers Technology go up and down completely randomly.

Pair Corralation between Ningbo MedicalSystem and Sinofibers Technology

Assuming the 90 days trading horizon Ningbo MedicalSystem Biotechnology is expected to under-perform the Sinofibers Technology. But the stock apears to be less risky and, when comparing its historical volatility, Ningbo MedicalSystem Biotechnology is 1.43 times less risky than Sinofibers Technology. The stock trades about 0.0 of its potential returns per unit of risk. The Sinofibers Technology Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,774  in Sinofibers Technology Co on September 29, 2024 and sell it today you would earn a total of  245.00  from holding Sinofibers Technology Co or generate 8.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ningbo MedicalSystem Biotechno  vs.  Sinofibers Technology Co

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 01020304050
JavaScript chart by amCharts 3.21.15300439 300777
       Timeline  
Ningbo MedicalSystem 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Ningbo MedicalSystem Biotechnology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ningbo MedicalSystem is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec1010.51111.51212.513
Sinofibers Technology 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Sinofibers Technology Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sinofibers Technology sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec242628303234

Ningbo MedicalSystem and Sinofibers Technology Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.34-7.74-5.15-2.550.02.655.398.1410.8813.62 0.0150.0200.0250.0300.035
JavaScript chart by amCharts 3.21.15300439 300777
       Returns  

Pair Trading with Ningbo MedicalSystem and Sinofibers Technology

The main advantage of trading using opposite Ningbo MedicalSystem and Sinofibers Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo MedicalSystem position performs unexpectedly, Sinofibers Technology 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 Sinofibers Technology will offset losses from the drop in Sinofibers Technology's long position.
The idea behind Ningbo MedicalSystem Biotechnology and Sinofibers Technology Co 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.

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