Correlation Between NAURA Technology and Tongding Interconnection

Can any of the company-specific risk be diversified away by investing in both NAURA Technology and Tongding Interconnection 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 Tongding Interconnection 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 Tongding Interconnection Information, you can compare the effects of market volatilities on NAURA Technology and Tongding Interconnection 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 Tongding Interconnection. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAURA Technology and Tongding Interconnection.

Diversification Opportunities for NAURA Technology and Tongding Interconnection

0.74

Correlation Coefficient

NAURA Technology  Tongding Interconnection

Poor diversification

The 3 months correlation between NAURA and Tongding is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NAURA Technology Group and Tongding Interconnection Infor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tongding Interconnection 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 Tongding Interconnection. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tongding Interconnection has no effect on the direction of NAURA Technology i.e., NAURA Technology and Tongding Interconnection go up and down completely randomly.

Pair Corralation between NAURA Technology and Tongding Interconnection

Assuming the 90 days trading horizon NAURA Technology Group is expected to generate 0.62 times more return on investment than Tongding Interconnection. However, NAURA Technology Group is 1.62 times less risky than Tongding Interconnection. It trades about 0.05 of its potential returns per unit of risk. Tongding Interconnection Information is currently generating about 0.01 per unit of risk. If you would invest  40,620  in NAURA Technology Group on December 25, 2024 and sell it today you would earn a total of  2,320  from holding NAURA Technology Group or generate 5.71% return on investment over 90 days.

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

NAURA Technology Group  vs.  Tongding Interconnection Infor

NAURA Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NAURA Technology Group are ranked lower than 4 (%) 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 April 2025.

Tongding Interconnection

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tongding Interconnection Information has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Tongding Interconnection 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 Tongding Interconnection

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

The idea behind NAURA Technology Group and Tongding Interconnection Information 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.