Correlation Between Ningbo MedicalSystem and Anhui Jianghuai

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ningbo MedicalSystem and Anhui Jianghuai 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 Anhui Jianghuai 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 Anhui Jianghuai Automobile, you can compare the effects of market volatilities on Ningbo MedicalSystem and Anhui Jianghuai 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 Anhui Jianghuai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo MedicalSystem and Anhui Jianghuai.

Diversification Opportunities for Ningbo MedicalSystem and Anhui Jianghuai

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Ningbo and Anhui is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo MedicalSystem Biotechno and Anhui Jianghuai Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Jianghuai Auto 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 Anhui Jianghuai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Jianghuai Auto has no effect on the direction of Ningbo MedicalSystem i.e., Ningbo MedicalSystem and Anhui Jianghuai go up and down completely randomly.

Pair Corralation between Ningbo MedicalSystem and Anhui Jianghuai

Assuming the 90 days trading horizon Ningbo MedicalSystem Biotechnology is expected to under-perform the Anhui Jianghuai. But the stock apears to be less risky and, when comparing its historical volatility, Ningbo MedicalSystem Biotechnology is 1.93 times less risky than Anhui Jianghuai. The stock trades about -0.04 of its potential returns per unit of risk. The Anhui Jianghuai Automobile is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  3,401  in Anhui Jianghuai Automobile on September 25, 2024 and sell it today you would earn a total of  357.00  from holding Anhui Jianghuai Automobile or generate 10.5% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Ningbo MedicalSystem Biotechno  vs.  Anhui Jianghuai Automobile

 Performance 
       Timeline  
Ningbo MedicalSystem 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo MedicalSystem Biotechnology are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo MedicalSystem sustained solid returns over the last few months and may actually be approaching a breakup point.
Anhui Jianghuai Auto 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Anhui Jianghuai Automobile are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anhui Jianghuai sustained solid returns over the last few months and may actually be approaching a breakup point.

Ningbo MedicalSystem and Anhui Jianghuai Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ningbo MedicalSystem and Anhui Jianghuai

The main advantage of trading using opposite Ningbo MedicalSystem and Anhui Jianghuai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo MedicalSystem position performs unexpectedly, Anhui Jianghuai 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 Anhui Jianghuai will offset losses from the drop in Anhui Jianghuai's long position.
The idea behind Ningbo MedicalSystem Biotechnology and Anhui Jianghuai Automobile 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.
Check out your portfolio center.
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 Stocks Directory module to find actively traded stocks across global markets.

Other Complementary Tools

Bond Analysis
Evaluate and analyze corporate bonds as a potential investment for your portfolios.
Idea Optimizer
Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio
Portfolio Anywhere
Track or share privately all of your investments from the convenience of any device
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments
Competition Analyzer
Analyze and compare many basic indicators for a group of related or unrelated entities