Correlation Between Ningbo GQY and Do Fluoride

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

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

Diversification Opportunities for Ningbo GQY and Do Fluoride

0.84

Correlation Coefficient

Ningbo GQY  Do Fluoride

Very poor diversification

The 3 months correlation between Ningbo and 002407 is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo GQY Video and Do Fluoride Chemicals Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Do Fluoride Chemicals and Ningbo GQY 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 GQY Video are associated (or correlated) with Do Fluoride. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Do Fluoride Chemicals has no effect on the direction of Ningbo GQY i.e., Ningbo GQY and Do Fluoride go up and down completely randomly.

Pair Corralation between Ningbo GQY and Do Fluoride

Assuming the 90 days trading horizon Ningbo GQY Video is expected to generate 1.46 times more return on investment than Do Fluoride. However, Ningbo GQY is 1.46 times more volatile than Do Fluoride Chemicals Co. It trades about 0.3 of its potential returns per unit of risk. Do Fluoride Chemicals Co is currently generating about 0.17 per unit of risk. If you would invest  371.00  in Ningbo GQY Video on September 15, 2024 and sell it today you would earn a total of  505.00  from holding Ningbo GQY Video or generate 136.12% return on investment over 90 days.

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

Ningbo GQY Video  vs.  Do Fluoride Chemicals Co

Ningbo GQY Video

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo GQY Video are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo GQY sustained solid returns over the last few months and may actually be approaching a breakup point.

Do Fluoride Chemicals

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Do Fluoride Chemicals Co are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Do Fluoride sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ningbo GQY and Do Fluoride

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

The idea behind Ningbo GQY Video and Do Fluoride Chemicals Co 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.