Correlation Between Shenzhen Topway and Niutech Environment

Can any of the company-specific risk be diversified away by investing in both Shenzhen Topway and Niutech Environment 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 Shenzhen Topway and Niutech Environment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shenzhen Topway Video and Niutech Environment Technology, you can compare the effects of market volatilities on Shenzhen Topway and Niutech Environment 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 Shenzhen Topway with a short position of Niutech Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shenzhen Topway and Niutech Environment.

Diversification Opportunities for Shenzhen Topway and Niutech Environment

0.92

Correlation Coefficient

Shenzhen Topway  Niutech Environment

Almost no diversification

The 3 months correlation between Shenzhen and Niutech is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Shenzhen Topway Video and Niutech Environment Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niutech Environment and Shenzhen Topway 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 Shenzhen Topway Video are associated (or correlated) with Niutech Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niutech Environment has no effect on the direction of Shenzhen Topway i.e., Shenzhen Topway and Niutech Environment go up and down completely randomly.

Pair Corralation between Shenzhen Topway and Niutech Environment

Assuming the 90 days trading horizon Shenzhen Topway Video is expected to under-perform the Niutech Environment. In addition to that, Shenzhen Topway is 1.41 times more volatile than Niutech Environment Technology. It trades about -0.05 of its total potential returns per unit of risk. Niutech Environment Technology is currently generating about 0.02 per unit of volatility. If you would invest  1,420  in Niutech Environment Technology on December 4, 2024 and sell it today you would earn a total of  14.00  from holding Niutech Environment Technology or generate 0.99% return on investment over 90 days.

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

Shenzhen Topway Video  vs.  Niutech Environment Technology

Shenzhen Topway Video

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shenzhen Topway Video has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Niutech Environment

Risk-Adjusted Performance

Weak

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

Pair Trading with Shenzhen Topway and Niutech Environment

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

The idea behind Shenzhen Topway Video and Niutech Environment Technology 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.