Correlation Between Runjian Communication and Sichuan Newsnet

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

Diversification Opportunities for Runjian Communication and Sichuan Newsnet

0.21
  Correlation Coefficient

Modest diversification

The 3 months correlation between Runjian and Sichuan is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Runjian Communication Co and Sichuan Newsnet Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sichuan Newsnet Media and Runjian Communication 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 Runjian Communication Co are associated (or correlated) with Sichuan Newsnet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sichuan Newsnet Media has no effect on the direction of Runjian Communication i.e., Runjian Communication and Sichuan Newsnet go up and down completely randomly.

Pair Corralation between Runjian Communication and Sichuan Newsnet

Assuming the 90 days trading horizon Runjian Communication Co is expected to under-perform the Sichuan Newsnet. But the stock apears to be less risky and, when comparing its historical volatility, Runjian Communication Co is 1.16 times less risky than Sichuan Newsnet. The stock trades about 0.0 of its potential returns per unit of risk. The Sichuan Newsnet Media is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,761  in Sichuan Newsnet Media on October 3, 2024 and sell it today you would lose (345.00) from holding Sichuan Newsnet Media or give up 19.59% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Runjian Communication Co  vs.  Sichuan Newsnet Media

 Performance 
       Timeline  
Runjian Communication 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Runjian Communication Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Runjian Communication is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Sichuan Newsnet Media 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Sichuan Newsnet Media 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.

Runjian Communication and Sichuan Newsnet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Runjian Communication and Sichuan Newsnet

The main advantage of trading using opposite Runjian Communication and Sichuan Newsnet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Runjian Communication position performs unexpectedly, Sichuan Newsnet 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 Newsnet will offset losses from the drop in Sichuan Newsnet's long position.
The idea behind Runjian Communication Co and Sichuan Newsnet Media 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 Stocks Directory module to find actively traded stocks across global markets.

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