Correlation Between NAURA Technology and Sichuan Furong

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

Diversification Opportunities for NAURA Technology and Sichuan Furong

0.52

Correlation Coefficient

NAURA Technology  Sichuan Furong

Very weak diversification

The 3 months correlation between NAURA and Sichuan is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding NAURA Technology Group and Sichuan Furong Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Furong Technology 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 Sichuan Furong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Furong Technology has no effect on the direction of NAURA Technology i.e., NAURA Technology and Sichuan Furong go up and down completely randomly.

Pair Corralation between NAURA Technology and Sichuan Furong

Assuming the 90 days trading horizon NAURA Technology Group is expected to generate 0.86 times more return on investment than Sichuan Furong. However, NAURA Technology Group is 1.16 times less risky than Sichuan Furong. It trades about 0.01 of its potential returns per unit of risk. Sichuan Furong Technology is currently generating about -0.03 per unit of risk. If you would invest  38,829  in NAURA Technology Group on October 10, 2024 and sell it today you would lose (202.00) from holding NAURA Technology Group or give up 0.52% of portfolio value over 90 days.

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

NAURA Technology Group  vs.  Sichuan Furong Technology

NAURA Technology

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days NAURA Technology Group has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Sichuan Furong Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sichuan Furong Technology 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 Sichuan Furong

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

The idea behind NAURA Technology Group and Sichuan Furong 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.