Correlation Between Telling Telecommunicatio and Nanjing Red

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

By analyzing existing cross correlation between Telling Telecommunication Holding and Nanjing Red Sun, you can compare the effects of market volatilities on Telling Telecommunicatio and Nanjing Red 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 Telling Telecommunicatio with a short position of Nanjing Red. Check out your portfolio center. Please also check ongoing floating volatility patterns of Telling Telecommunicatio and Nanjing Red.

Diversification Opportunities for Telling Telecommunicatio and Nanjing Red

0.48

Correlation Coefficient

Telling Telecommunicatio  Nanjing Red

Very weak diversification

The 3 months correlation between Telling and Nanjing is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Telling Telecommunication Hold and Nanjing Red Sun in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Red Sun and Telling Telecommunicatio 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 Telling Telecommunication Holding are associated (or correlated) with Nanjing Red. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Red Sun has no effect on the direction of Telling Telecommunicatio i.e., Telling Telecommunicatio and Nanjing Red go up and down completely randomly.

Pair Corralation between Telling Telecommunicatio and Nanjing Red

Assuming the 90 days trading horizon Telling Telecommunication Holding is expected to under-perform the Nanjing Red. In addition to that, Telling Telecommunicatio is 1.31 times more volatile than Nanjing Red Sun. It trades about -0.27 of its total potential returns per unit of risk. Nanjing Red Sun is currently generating about -0.09 per unit of volatility. If you would invest  634.00  in Nanjing Red Sun on October 25, 2024 and sell it today you would lose (35.00) from holding Nanjing Red Sun or give up 5.52% of portfolio value over 90 days.

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

Telling Telecommunication Hold  vs.  Nanjing Red Sun

Telling Telecommunicatio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telling Telecommunication Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nanjing Red Sun

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Telling Telecommunicatio and Nanjing Red

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

The idea behind Telling Telecommunication Holding and Nanjing Red Sun 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.