Correlation Between Xinjiang Baodi and Ningbo Ligong

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Can any of the company-specific risk be diversified away by investing in both Xinjiang Baodi 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 Xinjiang Baodi and Ningbo Ligong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xinjiang Baodi Mining and Ningbo Ligong Online, you can compare the effects of market volatilities on Xinjiang Baodi 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 Xinjiang Baodi with a short position of Ningbo Ligong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xinjiang Baodi and Ningbo Ligong.

Diversification Opportunities for Xinjiang Baodi and Ningbo Ligong

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Xinjiang and Ningbo is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Xinjiang Baodi Mining 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 Xinjiang Baodi 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 Xinjiang Baodi Mining 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 Xinjiang Baodi i.e., Xinjiang Baodi and Ningbo Ligong go up and down completely randomly.

Pair Corralation between Xinjiang Baodi and Ningbo Ligong

Assuming the 90 days trading horizon Xinjiang Baodi Mining is expected to generate 1.2 times more return on investment than Ningbo Ligong. However, Xinjiang Baodi is 1.2 times more volatile than Ningbo Ligong Online. It trades about 0.0 of its potential returns per unit of risk. Ningbo Ligong Online is currently generating about -0.11 per unit of risk. If you would invest  665.00  in Xinjiang Baodi Mining on September 25, 2024 and sell it today you would lose (3.00) from holding Xinjiang Baodi Mining or give up 0.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Xinjiang Baodi Mining  vs.  Ningbo Ligong Online

 Performance 
       Timeline  
Xinjiang Baodi Mining 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Xinjiang Baodi Mining are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Xinjiang Baodi 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

 
Weak
 
Strong
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 somewhat strong basic indicators, Ningbo Ligong is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Xinjiang Baodi and Ningbo Ligong Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Xinjiang Baodi and Ningbo Ligong

The main advantage of trading using opposite Xinjiang Baodi and Ningbo Ligong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xinjiang Baodi 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 Xinjiang Baodi Mining 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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