Correlation Between Ningbo Ligong and Masterwork Machinery

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

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

Diversification Opportunities for Ningbo Ligong and Masterwork Machinery

-0.39

Correlation Coefficient

Ningbo Ligong  Masterwork Machinery

Very good diversification

The 3 months correlation between Ningbo and Masterwork is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Ligong Online and Masterwork Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Masterwork Machinery and Ningbo Ligong 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 Ligong Online are associated (or correlated) with Masterwork Machinery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Masterwork Machinery has no effect on the direction of Ningbo Ligong i.e., Ningbo Ligong and Masterwork Machinery go up and down completely randomly.

Pair Corralation between Ningbo Ligong and Masterwork Machinery

Assuming the 90 days trading horizon Ningbo Ligong is expected to generate 123.52 times less return on investment than Masterwork Machinery. But when comparing it to its historical volatility, Ningbo Ligong Online is 1.92 times less risky than Masterwork Machinery. It trades about 0.0 of its potential returns per unit of risk. Masterwork Machinery is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  437.00  in Masterwork Machinery on September 25, 2024 and sell it today you would earn a total of  156.00  from holding Masterwork Machinery or generate 35.7% return on investment over 90 days.

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

Ningbo Ligong Online  vs.  Masterwork Machinery

Ningbo Ligong Online

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ningbo Ligong Online has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ningbo Ligong is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Masterwork Machinery

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Masterwork Machinery are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Masterwork Machinery sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ningbo Ligong and Masterwork Machinery

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

The idea behind Ningbo Ligong Online and Masterwork Machinery 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.