Correlation Between Ningbo MedicalSystem and China Molybdenum

Can any of the company-specific risk be diversified away by investing in both Ningbo MedicalSystem and China Molybdenum 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 China Molybdenum 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 China Molybdenum Co, you can compare the effects of market volatilities on Ningbo MedicalSystem and China Molybdenum 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 China Molybdenum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo MedicalSystem and China Molybdenum.

Diversification Opportunities for Ningbo MedicalSystem and China Molybdenum

0.04

Correlation Coefficient

Ningbo MedicalSystem  China Molybdenum

Significant diversification

The 3 months correlation between Ningbo and China is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo MedicalSystem Biotechno and China Molybdenum Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Molybdenum 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 China Molybdenum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Molybdenum has no effect on the direction of Ningbo MedicalSystem i.e., Ningbo MedicalSystem and China Molybdenum go up and down completely randomly.

Pair Corralation between Ningbo MedicalSystem and China Molybdenum

Assuming the 90 days trading horizon Ningbo MedicalSystem is expected to generate 9.73 times less return on investment than China Molybdenum. But when comparing it to its historical volatility, Ningbo MedicalSystem Biotechnology is 1.04 times less risky than China Molybdenum. It trades about 0.0 of its potential returns per unit of risk. China Molybdenum Co is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  477.00  in China Molybdenum Co on September 28, 2024 and sell it today you would earn a total of  218.00  from holding China Molybdenum Co or generate 45.7% return on investment over 90 days.

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

Ningbo MedicalSystem Biotechno  vs.  China Molybdenum Co

Ningbo MedicalSystem

Risk-Adjusted Performance

0 of 100

Insignificant

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.

China Molybdenum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Molybdenum Co 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Ningbo MedicalSystem and China Molybdenum

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

The idea behind Ningbo MedicalSystem Biotechnology and China Molybdenum 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.