Correlation Between Beijing Roborock and Ningbo Tip

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

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

Diversification Opportunities for Beijing Roborock and Ningbo Tip

-0.23

Correlation Coefficient

Beijing Roborock  Ningbo Tip

Very good diversification

The 3 months correlation between Beijing and Ningbo is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Beijing Roborock Technology and Ningbo Tip Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Tip Rubber and Beijing Roborock 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 Beijing Roborock Technology are associated (or correlated) with Ningbo Tip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Tip Rubber has no effect on the direction of Beijing Roborock i.e., Beijing Roborock and Ningbo Tip go up and down completely randomly.

Pair Corralation between Beijing Roborock and Ningbo Tip

Assuming the 90 days trading horizon Beijing Roborock Technology is expected to under-perform the Ningbo Tip. In addition to that, Beijing Roborock is 1.71 times more volatile than Ningbo Tip Rubber. It trades about -0.01 of its total potential returns per unit of risk. Ningbo Tip Rubber is currently generating about 0.23 per unit of volatility. If you would invest  1,005  in Ningbo Tip Rubber on September 14, 2024 and sell it today you would earn a total of  444.00  from holding Ningbo Tip Rubber or generate 44.18% return on investment over 90 days.

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

Beijing Roborock Technology  vs.  Ningbo Tip Rubber

Beijing Roborock Tec

Risk-Adjusted Performance

0 of 100

Very Weak

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

Ningbo Tip Rubber

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Tip Rubber are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ningbo Tip sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Beijing Roborock and Ningbo Tip

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

The idea behind Beijing Roborock Technology and Ningbo Tip Rubber 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.