Correlation Between Lumia and Ningbo Jintian

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

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

Diversification Opportunities for Lumia and Ningbo Jintian

0.54

Correlation Coefficient

Lumia  Ningbo Jintian

Very weak diversification

The 3 months correlation between Lumia and Ningbo is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Lumia and Ningbo Jintian Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Jintian Copper and Lumia 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 Lumia are associated (or correlated) with Ningbo Jintian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Jintian Copper has no effect on the direction of Lumia i.e., Lumia and Ningbo Jintian go up and down completely randomly.

Pair Corralation between Lumia and Ningbo Jintian

Assuming the 90 days trading horizon Lumia is expected to generate 50.91 times more return on investment than Ningbo Jintian. However, Lumia is 50.91 times more volatile than Ningbo Jintian Copper. It trades about 0.12 of its potential returns per unit of risk. Ningbo Jintian Copper is currently generating about 0.07 per unit of risk. If you would invest  0.00  in Lumia on October 24, 2024 and sell it today you would earn a total of  101.00  from holding Lumia or generate 9.223372036854776E16% return on investment over 90 days.

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

Lumia  vs.  Ningbo Jintian Copper

Lumia

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lumia are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental indicators, Lumia exhibited solid returns over the last few months and may actually be approaching a breakup point.

Ningbo Jintian Copper

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Jintian Copper are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Jintian may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Lumia and Ningbo Jintian

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

The idea behind Lumia and Ningbo Jintian Copper 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.