Correlation Between NAURA Technology and Yunnan Chuangxin

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

Diversification Opportunities for NAURA Technology and Yunnan Chuangxin

0.75

Correlation Coefficient

NAURA Technology  Yunnan Chuangxin

Poor diversification

The 3 months correlation between NAURA and Yunnan is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding NAURA Technology Group and Yunnan Chuangxin New in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yunnan Chuangxin New 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 Yunnan Chuangxin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yunnan Chuangxin New has no effect on the direction of NAURA Technology i.e., NAURA Technology and Yunnan Chuangxin go up and down completely randomly.

Pair Corralation between NAURA Technology and Yunnan Chuangxin

Assuming the 90 days trading horizon NAURA Technology Group is expected to generate 1.4 times more return on investment than Yunnan Chuangxin. However, NAURA Technology is 1.4 times more volatile than Yunnan Chuangxin New. It trades about -0.01 of its potential returns per unit of risk. Yunnan Chuangxin New is currently generating about -0.59 per unit of risk. If you would invest  38,648  in NAURA Technology Group on October 14, 2024 and sell it today you would lose (283.00) from holding NAURA Technology Group or give up 0.73% of portfolio value over 90 days.

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

NAURA Technology Group  vs.  Yunnan Chuangxin New

NAURA Technology

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NAURA Technology Group are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NAURA Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Yunnan Chuangxin New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yunnan Chuangxin New 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.

Pair Trading with NAURA Technology and Yunnan Chuangxin

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

The idea behind NAURA Technology Group and Yunnan Chuangxin New 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.