Correlation Between Sichuan Fulin and NAURA Technology

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

By analyzing existing cross correlation between Sichuan Fulin Transportation and NAURA Technology Group, you can compare the effects of market volatilities on Sichuan Fulin and NAURA 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 Sichuan Fulin with a short position of NAURA Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sichuan Fulin and NAURA Technology.

Diversification Opportunities for Sichuan Fulin and NAURA Technology

0.59

Correlation Coefficient

Sichuan Fulin  NAURA Technology

Very weak diversification

The 3 months correlation between Sichuan and NAURA is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Sichuan Fulin Transportation and NAURA Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAURA Technology and Sichuan Fulin 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 Sichuan Fulin Transportation are associated (or correlated) with NAURA Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAURA Technology has no effect on the direction of Sichuan Fulin i.e., Sichuan Fulin and NAURA Technology go up and down completely randomly.

Pair Corralation between Sichuan Fulin and NAURA Technology

Assuming the 90 days trading horizon Sichuan Fulin Transportation is expected to generate 1.3 times more return on investment than NAURA Technology. However, Sichuan Fulin is 1.3 times more volatile than NAURA Technology Group. It trades about 0.2 of its potential returns per unit of risk. NAURA Technology Group is currently generating about -0.07 per unit of risk. If you would invest  682.00  in Sichuan Fulin Transportation on September 25, 2024 and sell it today you would earn a total of  74.00  from holding Sichuan Fulin Transportation or generate 10.85% return on investment over 90 days.

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

Sichuan Fulin Transportation  vs.  NAURA Technology Group

Sichuan Fulin Transp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Sichuan Fulin Transportation are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sichuan Fulin sustained solid returns over the last few months and may actually be approaching a breakup point.

NAURA Technology

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NAURA Technology Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NAURA Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sichuan Fulin and NAURA Technology

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

The idea behind Sichuan Fulin Transportation and NAURA Technology Group 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.