Correlation Between Ming Yang and Ningbo Bohui

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

By analyzing existing cross correlation between Ming Yang Smart and Ningbo Bohui Chemical, you can compare the effects of market volatilities on Ming Yang and Ningbo Bohui 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 Ming Yang with a short position of Ningbo Bohui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ming Yang and Ningbo Bohui.

Diversification Opportunities for Ming Yang and Ningbo Bohui

0.28

Correlation Coefficient

Ming Yang  Ningbo Bohui

Modest diversification

The 3 months correlation between Ming and Ningbo is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Ming Yang Smart and Ningbo Bohui Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Bohui Chemical and Ming Yang 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 Ming Yang Smart are associated (or correlated) with Ningbo Bohui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Bohui Chemical has no effect on the direction of Ming Yang i.e., Ming Yang and Ningbo Bohui go up and down completely randomly.

Pair Corralation between Ming Yang and Ningbo Bohui

Assuming the 90 days trading horizon Ming Yang is expected to generate 3.9 times less return on investment than Ningbo Bohui. But when comparing it to its historical volatility, Ming Yang Smart is 2.71 times less risky than Ningbo Bohui. It trades about 0.08 of its potential returns per unit of risk. Ningbo Bohui Chemical is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  737.00  in Ningbo Bohui Chemical on December 5, 2024 and sell it today you would earn a total of  74.00  from holding Ningbo Bohui Chemical or generate 10.04% return on investment over 90 days.

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

Ming Yang Smart  vs.  Ningbo Bohui Chemical

Ming Yang Smart

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ming Yang Smart 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Ningbo Bohui Chemical

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Bohui Chemical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Bohui may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ming Yang and Ningbo Bohui

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

The idea behind Ming Yang Smart and Ningbo Bohui Chemical 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 CEOs Directory module to screen CEOs from public companies around the world.