Correlation Between Gem Year and Ningbo Ligong

Can any of the company-specific risk be diversified away by investing in both Gem Year and Ningbo Ligong 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 Gem Year and Ningbo Ligong into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Gem Year Industrial Co and Ningbo Ligong Online, you can compare the effects of market volatilities on Gem Year and Ningbo Ligong 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 Gem Year with a short position of Ningbo Ligong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gem Year and Ningbo Ligong.

Diversification Opportunities for Gem Year and Ningbo Ligong

-0.25

Correlation Coefficient

Gem Year  Ningbo Ligong

Very good diversification

The 3 months correlation between Gem and Ningbo is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Gem Year Industrial Co and Ningbo Ligong Online in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Ligong Online and Gem Year 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 Gem Year Industrial Co are associated (or correlated) with Ningbo Ligong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Ligong Online has no effect on the direction of Gem Year i.e., Gem Year and Ningbo Ligong go up and down completely randomly.

Pair Corralation between Gem Year and Ningbo Ligong

Assuming the 90 days trading horizon Gem Year is expected to generate 5.46 times less return on investment than Ningbo Ligong. But when comparing it to its historical volatility, Gem Year Industrial Co is 1.11 times less risky than Ningbo Ligong. It trades about 0.01 of its potential returns per unit of risk. Ningbo Ligong Online is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  975.00  in Ningbo Ligong Online on October 23, 2024 and sell it today you would earn a total of  297.00  from holding Ningbo Ligong Online or generate 30.46% return on investment over 90 days.

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

Gem Year Industrial Co  vs.  Ningbo Ligong Online

Gem Year Industrial

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Gem Year Industrial Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Gem Year sustained solid returns over the last few months and may actually be approaching a breakup point.

Ningbo Ligong Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ningbo Ligong Online 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Gem Year and Ningbo Ligong

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

The idea behind Gem Year Industrial Co and Ningbo Ligong Online 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.