Correlation Between Huitong Construction and Nanxing Furniture
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By analyzing existing cross correlation between Huitong Construction Group and Nanxing Furniture Machinery, you can compare the effects of market volatilities on Huitong Construction and Nanxing Furniture 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 Huitong Construction with a short position of Nanxing Furniture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huitong Construction and Nanxing Furniture.
Diversification Opportunities for Huitong Construction and Nanxing Furniture
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Huitong and Nanxing is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Huitong Construction Group and Nanxing Furniture Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanxing Furniture and Huitong Construction 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 Huitong Construction Group are associated (or correlated) with Nanxing Furniture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanxing Furniture has no effect on the direction of Huitong Construction i.e., Huitong Construction and Nanxing Furniture go up and down completely randomly.
Pair Corralation between Huitong Construction and Nanxing Furniture
Assuming the 90 days trading horizon Huitong Construction is expected to generate 1.48 times less return on investment than Nanxing Furniture. But when comparing it to its historical volatility, Huitong Construction Group is 1.39 times less risky than Nanxing Furniture. It trades about 0.17 of its potential returns per unit of risk. Nanxing Furniture Machinery is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 1,140 in Nanxing Furniture Machinery on September 12, 2024 and sell it today you would earn a total of 554.00 from holding Nanxing Furniture Machinery or generate 48.6% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Huitong Construction Group vs. Nanxing Furniture Machinery
Performance |
Timeline |
Huitong Construction |
Nanxing Furniture |
Huitong Construction and Nanxing Furniture Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Huitong Construction and Nanxing Furniture
The main advantage of trading using opposite Huitong Construction and Nanxing Furniture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Huitong Construction position performs unexpectedly, Nanxing Furniture 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 Nanxing Furniture will offset losses from the drop in Nanxing Furniture's long position.Huitong Construction vs. Agricultural Bank of | Huitong Construction vs. Shanghai CEO Environmental | Huitong Construction vs. JCHX Mining Management | Huitong Construction vs. Jiangsu Financial Leasing |
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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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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