Correlation Between Ningbo Boway and Yunnan Aluminium

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

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

Diversification Opportunities for Ningbo Boway and Yunnan Aluminium

0.63

Correlation Coefficient

Ningbo Boway  Yunnan Aluminium

Poor diversification

The 3 months correlation between Ningbo and Yunnan is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Boway Alloy and Yunnan Aluminium Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunnan Aluminium and Ningbo Boway 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 Boway Alloy are associated (or correlated) with Yunnan Aluminium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunnan Aluminium has no effect on the direction of Ningbo Boway i.e., Ningbo Boway and Yunnan Aluminium go up and down completely randomly.

Pair Corralation between Ningbo Boway and Yunnan Aluminium

Assuming the 90 days trading horizon Ningbo Boway is expected to generate 2.77 times less return on investment than Yunnan Aluminium. In addition to that, Ningbo Boway is 1.47 times more volatile than Yunnan Aluminium Co. It trades about 0.05 of its total potential returns per unit of risk. Yunnan Aluminium Co is currently generating about 0.2 per unit of volatility. If you would invest  1,420  in Yunnan Aluminium Co on December 26, 2024 and sell it today you would earn a total of  353.00  from holding Yunnan Aluminium Co or generate 24.86% return on investment over 90 days.

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

Ningbo Boway Alloy  vs.  Yunnan Aluminium Co

Ningbo Boway Alloy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Boway Alloy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Boway may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Yunnan Aluminium

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Yunnan Aluminium Co are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Yunnan Aluminium sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ningbo Boway and Yunnan Aluminium

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

The idea behind Ningbo Boway Alloy and Yunnan Aluminium 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.