Correlation Between Iat Automobile and Ningxia Xiaoming

Can any of the company-specific risk be diversified away by investing in both Iat Automobile and Ningxia Xiaoming 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 Iat Automobile and Ningxia Xiaoming into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Iat Automobile Technology and Ningxia Xiaoming Agriculture, you can compare the effects of market volatilities on Iat Automobile and Ningxia Xiaoming 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 Iat Automobile with a short position of Ningxia Xiaoming. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iat Automobile and Ningxia Xiaoming.

Diversification Opportunities for Iat Automobile and Ningxia Xiaoming

0.84

Correlation Coefficient

Iat Automobile  Ningxia Xiaoming

Very poor diversification

The 3 months correlation between Iat and Ningxia is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Iat Automobile Technology and Ningxia Xiaoming Agriculture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningxia Xiaoming Agr and Iat Automobile 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 Iat Automobile Technology are associated (or correlated) with Ningxia Xiaoming. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningxia Xiaoming Agr has no effect on the direction of Iat Automobile i.e., Iat Automobile and Ningxia Xiaoming go up and down completely randomly.

Pair Corralation between Iat Automobile and Ningxia Xiaoming

Assuming the 90 days trading horizon Iat Automobile is expected to generate 13.0 times less return on investment than Ningxia Xiaoming. In addition to that, Iat Automobile is 1.47 times more volatile than Ningxia Xiaoming Agriculture. It trades about 0.01 of its total potential returns per unit of risk. Ningxia Xiaoming Agriculture is currently generating about 0.23 per unit of volatility. If you would invest  1,203  in Ningxia Xiaoming Agriculture on September 17, 2024 and sell it today you would earn a total of  156.00  from holding Ningxia Xiaoming Agriculture or generate 12.97% return on investment over 90 days.

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

Iat Automobile Technology  vs.  Ningxia Xiaoming Agriculture

Iat Automobile Technology

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Iat Automobile Technology are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Iat Automobile sustained solid returns over the last few months and may actually be approaching a breakup point.

Ningxia Xiaoming Agr

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ningxia Xiaoming Agriculture are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningxia Xiaoming sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Iat Automobile and Ningxia Xiaoming

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

The idea behind Iat Automobile Technology and Ningxia Xiaoming Agriculture 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.