Correlation Between Ningbo Fujia and Guangzhou Dongfang

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Ningbo Fujia and Guangzhou Dongfang 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 Fujia and Guangzhou Dongfang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ningbo Fujia Industrial and Guangzhou Dongfang Hotel, you can compare the effects of market volatilities on Ningbo Fujia and Guangzhou Dongfang 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 Fujia with a short position of Guangzhou Dongfang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Fujia and Guangzhou Dongfang.

Diversification Opportunities for Ningbo Fujia and Guangzhou Dongfang

NingboGuangzhouDiversified AwayNingboGuangzhouDiversified Away100%
0.04
  Correlation Coefficient

Significant diversification

The 3 months correlation between Ningbo and Guangzhou is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Fujia Industrial and Guangzhou Dongfang Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Dongfang Hotel and Ningbo Fujia 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 Fujia Industrial are associated (or correlated) with Guangzhou Dongfang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Dongfang Hotel has no effect on the direction of Ningbo Fujia i.e., Ningbo Fujia and Guangzhou Dongfang go up and down completely randomly.

Pair Corralation between Ningbo Fujia and Guangzhou Dongfang

Assuming the 90 days trading horizon Ningbo Fujia Industrial is expected to generate 1.59 times more return on investment than Guangzhou Dongfang. However, Ningbo Fujia is 1.59 times more volatile than Guangzhou Dongfang Hotel. It trades about 0.09 of its potential returns per unit of risk. Guangzhou Dongfang Hotel is currently generating about -0.02 per unit of risk. If you would invest  1,289  in Ningbo Fujia Industrial on October 20, 2024 and sell it today you would earn a total of  232.00  from holding Ningbo Fujia Industrial or generate 18.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Ningbo Fujia Industrial  vs.  Guangzhou Dongfang Hotel

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -10-5051015
JavaScript chart by amCharts 3.21.15603219 000524
       Timeline  
Ningbo Fujia Industrial 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Fujia Industrial are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Fujia sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan1212.51313.51414.51515.5
Guangzhou Dongfang Hotel 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Guangzhou Dongfang Hotel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Guangzhou Dongfang is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan99.51010.51111.512

Ningbo Fujia and Guangzhou Dongfang Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-11.41-8.54-5.68-2.820.02.895.888.8711.8714.86 0.010.020.030.040.050.060.07
JavaScript chart by amCharts 3.21.15603219 000524
       Returns  

Pair Trading with Ningbo Fujia and Guangzhou Dongfang

The main advantage of trading using opposite Ningbo Fujia and Guangzhou Dongfang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ningbo Fujia position performs unexpectedly, Guangzhou Dongfang 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 Guangzhou Dongfang will offset losses from the drop in Guangzhou Dongfang's long position.
The idea behind Ningbo Fujia Industrial and Guangzhou Dongfang Hotel 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.
Check out your portfolio center.
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

Other Complementary Tools

Balance Of Power
Check stock momentum by analyzing Balance Of Power indicator and other technical ratios
Commodity Directory
Find actively traded commodities issued by global exchanges
ETFs
Find actively traded Exchange Traded Funds (ETF) from around the world
Portfolio Center
All portfolio management and optimization tools to improve performance of your portfolios
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk