Correlation Between Southern PublishingMedia and Ningxia Younglight

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

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

Diversification Opportunities for Southern PublishingMedia and Ningxia Younglight

0.11

Correlation Coefficient

Southern PublishingMedia  Ningxia Younglight

Average diversification

The 3 months correlation between Southern and Ningxia is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Southern PublishingMedia Co and Ningxia Younglight Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningxia Younglight and Southern PublishingMedia 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 Southern PublishingMedia Co are associated (or correlated) with Ningxia Younglight. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningxia Younglight has no effect on the direction of Southern PublishingMedia i.e., Southern PublishingMedia and Ningxia Younglight go up and down completely randomly.

Pair Corralation between Southern PublishingMedia and Ningxia Younglight

Assuming the 90 days trading horizon Southern PublishingMedia Co is expected to generate 0.97 times more return on investment than Ningxia Younglight. However, Southern PublishingMedia Co is 1.03 times less risky than Ningxia Younglight. It trades about 0.04 of its potential returns per unit of risk. Ningxia Younglight Chemicals is currently generating about 0.02 per unit of risk. If you would invest  1,538  in Southern PublishingMedia Co on December 27, 2024 and sell it today you would earn a total of  50.00  from holding Southern PublishingMedia Co or generate 3.25% return on investment over 90 days.

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

Southern PublishingMedia Co  vs.  Ningxia Younglight Chemicals

Southern PublishingMedia

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Southern PublishingMedia Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Southern PublishingMedia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ningxia Younglight

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ningxia Younglight Chemicals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ningxia Younglight is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Southern PublishingMedia and Ningxia Younglight

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

The idea behind Southern PublishingMedia Co and Ningxia Younglight Chemicals 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .