Correlation Between Ningxia Building and Anji Foodstuff

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

By analyzing existing cross correlation between Ningxia Building Materials and Anji Foodstuff Co, you can compare the effects of market volatilities on Ningxia Building and Anji Foodstuff 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 Ningxia Building with a short position of Anji Foodstuff. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningxia Building and Anji Foodstuff.

Diversification Opportunities for Ningxia Building and Anji Foodstuff

0.66

Correlation Coefficient

Ningxia Building  Anji Foodstuff

Poor diversification

The 3 months correlation between Ningxia and Anji is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Ningxia Building Materials and Anji Foodstuff Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anji Foodstuff and Ningxia Building 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 Ningxia Building Materials are associated (or correlated) with Anji Foodstuff. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anji Foodstuff has no effect on the direction of Ningxia Building i.e., Ningxia Building and Anji Foodstuff go up and down completely randomly.

Pair Corralation between Ningxia Building and Anji Foodstuff

Assuming the 90 days trading horizon Ningxia Building Materials is expected to generate 1.21 times more return on investment than Anji Foodstuff. However, Ningxia Building is 1.21 times more volatile than Anji Foodstuff Co. It trades about 0.03 of its potential returns per unit of risk. Anji Foodstuff Co is currently generating about 0.0 per unit of risk. If you would invest  1,168  in Ningxia Building Materials on October 4, 2024 and sell it today you would earn a total of  289.00  from holding Ningxia Building Materials or generate 24.74% return on investment over 90 days.

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

Ningxia Building Materials  vs.  Anji Foodstuff Co

Ningxia Building Mat

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ningxia Building Materials are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningxia Building may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Anji Foodstuff

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Anji Foodstuff Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Anji Foodstuff is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Ningxia Building and Anji Foodstuff

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

The idea behind Ningxia Building Materials and Anji Foodstuff 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.