Correlation Between GalaxyCore and Ningbo Fangzheng

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

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

Diversification Opportunities for GalaxyCore and Ningbo Fangzheng

0.46

Correlation Coefficient

GalaxyCore  Ningbo Fangzheng

Very weak diversification

The 3 months correlation between GalaxyCore and Ningbo is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding GalaxyCore and Ningbo Fangzheng Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Fangzheng Aut and GalaxyCore 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 GalaxyCore are associated (or correlated) with Ningbo Fangzheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Fangzheng Aut has no effect on the direction of GalaxyCore i.e., GalaxyCore and Ningbo Fangzheng go up and down completely randomly.

Pair Corralation between GalaxyCore and Ningbo Fangzheng

Assuming the 90 days trading horizon GalaxyCore is expected to generate 0.91 times more return on investment than Ningbo Fangzheng. However, GalaxyCore is 1.1 times less risky than Ningbo Fangzheng. It trades about -0.01 of its potential returns per unit of risk. Ningbo Fangzheng Automobile is currently generating about -0.02 per unit of risk. If you would invest  1,780  in GalaxyCore on October 4, 2024 and sell it today you would lose (436.00) from holding GalaxyCore or give up 24.49% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.79%
Values	Daily Returns

GalaxyCore  vs.  Ningbo Fangzheng Automobile

GalaxyCore

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ningbo Fangzheng Aut

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ningbo Fangzheng Automobile 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with GalaxyCore and Ningbo Fangzheng

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

The idea behind GalaxyCore and Ningbo Fangzheng Automobile 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.