Correlation Between Impulse Qingdao and Nanjing OLO

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Can any of the company-specific risk be diversified away by investing in both Impulse Qingdao and Nanjing OLO 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 Impulse Qingdao and Nanjing OLO into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Impulse Qingdao Health and Nanjing OLO Home, you can compare the effects of market volatilities on Impulse Qingdao and Nanjing OLO 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 Impulse Qingdao with a short position of Nanjing OLO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Impulse Qingdao and Nanjing OLO.

Diversification Opportunities for Impulse Qingdao and Nanjing OLO

ImpulseNanjingDiversified AwayImpulseNanjingDiversified Away100%
0.71
  Correlation Coefficient

Poor diversification

The 3 months correlation between Impulse and Nanjing is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Impulse Qingdao Health and Nanjing OLO Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing OLO Home and Impulse Qingdao 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 Impulse Qingdao Health are associated (or correlated) with Nanjing OLO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing OLO Home has no effect on the direction of Impulse Qingdao i.e., Impulse Qingdao and Nanjing OLO go up and down completely randomly.

Pair Corralation between Impulse Qingdao and Nanjing OLO

Assuming the 90 days trading horizon Impulse Qingdao Health is expected to generate 1.62 times more return on investment than Nanjing OLO. However, Impulse Qingdao is 1.62 times more volatile than Nanjing OLO Home. It trades about 0.1 of its potential returns per unit of risk. Nanjing OLO Home is currently generating about -0.05 per unit of risk. If you would invest  1,780  in Impulse Qingdao Health on September 30, 2024 and sell it today you would earn a total of  458.00  from holding Impulse Qingdao Health or generate 25.73% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Impulse Qingdao Health  vs.  Nanjing OLO Home

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec 010203040506070
JavaScript chart by amCharts 3.21.15002899 603326
       Timeline  
Impulse Qingdao Health 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Impulse Qingdao Health are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Impulse Qingdao sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec161820222426
Nanjing OLO Home 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nanjing OLO Home 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.
JavaScript chart by amCharts 3.21.15OctNovDecNovDec66.577.58

Impulse Qingdao and Nanjing OLO Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-15.43-11.55-7.68-3.810.04.088.2912.5116.7320.94 0.0100.0150.0200.0250.030
JavaScript chart by amCharts 3.21.15002899 603326
       Returns  

Pair Trading with Impulse Qingdao and Nanjing OLO

The main advantage of trading using opposite Impulse Qingdao and Nanjing OLO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Impulse Qingdao position performs unexpectedly, Nanjing OLO 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 Nanjing OLO will offset losses from the drop in Nanjing OLO's long position.
The idea behind Impulse Qingdao Health and Nanjing OLO Home 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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