Correlation Between Huaxi Securities and NAURA Technology

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

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

Diversification Opportunities for Huaxi Securities and NAURA Technology

0.8

Correlation Coefficient

Huaxi Securities  NAURA Technology

Very poor diversification

The 3 months correlation between Huaxi and NAURA is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Huaxi Securities Co and NAURA Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAURA Technology and Huaxi Securities 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 Huaxi Securities Co are associated (or correlated) with NAURA Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAURA Technology has no effect on the direction of Huaxi Securities i.e., Huaxi Securities and NAURA Technology go up and down completely randomly.

Pair Corralation between Huaxi Securities and NAURA Technology

Assuming the 90 days trading horizon Huaxi Securities is expected to generate 2.12 times less return on investment than NAURA Technology. But when comparing it to its historical volatility, Huaxi Securities Co is 1.11 times less risky than NAURA Technology. It trades about 0.06 of its potential returns per unit of risk. NAURA Technology Group is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  24,036  in NAURA Technology Group on October 2, 2024 and sell it today you would earn a total of  16,661  from holding NAURA Technology Group or generate 69.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.54%
Values	Daily Returns

Huaxi Securities Co  vs.  NAURA Technology Group

Huaxi Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Huaxi Securities Co 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.

NAURA Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NAURA Technology Group are ranked lower than 1 (%) 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.

Pair Trading with Huaxi Securities and NAURA Technology

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

The idea behind Huaxi Securities Co and NAURA Technology Group 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.