Correlation Between NAURA Technology and Qinghai Salt

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

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

Diversification Opportunities for NAURA Technology and Qinghai Salt

0.67

Correlation Coefficient

NAURA Technology  Qinghai Salt

Poor diversification

The 3 months correlation between NAURA and Qinghai is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding NAURA Technology Group and Qinghai Salt Lake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Qinghai Salt Lake and NAURA Technology 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 NAURA Technology Group are associated (or correlated) with Qinghai Salt. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Qinghai Salt Lake has no effect on the direction of NAURA Technology i.e., NAURA Technology and Qinghai Salt go up and down completely randomly.

Pair Corralation between NAURA Technology and Qinghai Salt

Assuming the 90 days trading horizon NAURA Technology Group is expected to generate 1.49 times more return on investment than Qinghai Salt. However, NAURA Technology is 1.49 times more volatile than Qinghai Salt Lake. It trades about 0.04 of its potential returns per unit of risk. Qinghai Salt Lake is currently generating about -0.05 per unit of risk. If you would invest  36,901  in NAURA Technology Group on October 12, 2024 and sell it today you would earn a total of  1,668  from holding NAURA Technology Group or generate 4.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

NAURA Technology Group  vs.  Qinghai Salt Lake

NAURA Technology

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NAURA Technology Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NAURA Technology may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Qinghai Salt Lake

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with NAURA Technology and Qinghai Salt

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

The idea behind NAURA Technology Group and Qinghai Salt Lake 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.