Correlation Between CGN Nuclear and Advanced Technology

Can any of the company-specific risk be diversified away by investing in both CGN Nuclear and Advanced Technology 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 CGN Nuclear and Advanced Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CGN Nuclear Technology and Advanced Technology Materials, you can compare the effects of market volatilities on CGN Nuclear and Advanced Technology 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 CGN Nuclear with a short position of Advanced Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CGN Nuclear and Advanced Technology.

Diversification Opportunities for CGN Nuclear and Advanced Technology

0.53

Correlation Coefficient

CGN Nuclear  Advanced Technology

Very weak diversification

The 3 months correlation between CGN and Advanced is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CGN Nuclear Technology and Advanced Technology Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Advanced Technology and CGN Nuclear 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 CGN Nuclear Technology are associated (or correlated) with Advanced Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Advanced Technology has no effect on the direction of CGN Nuclear i.e., CGN Nuclear and Advanced Technology go up and down completely randomly.

Pair Corralation between CGN Nuclear and Advanced Technology

Assuming the 90 days trading horizon CGN Nuclear is expected to generate 230.25 times less return on investment than Advanced Technology. But when comparing it to its historical volatility, CGN Nuclear Technology is 1.02 times less risky than Advanced Technology. It trades about 0.0 of its potential returns per unit of risk. Advanced Technology Materials is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  869.00  in Advanced Technology Materials on October 24, 2024 and sell it today you would earn a total of  317.00  from holding Advanced Technology Materials or generate 36.48% return on investment over 90 days.

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

CGN Nuclear Technology  vs.  Advanced Technology Materials

CGN Nuclear Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CGN Nuclear Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, CGN Nuclear is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Advanced Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Advanced Technology Materials are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Advanced Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CGN Nuclear and Advanced Technology

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

The idea behind CGN Nuclear Technology and Advanced Technology Materials 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.