Correlation Between Northking Information and JS Corrugating

Can any of the company-specific risk be diversified away by investing in both Northking Information and JS Corrugating 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 Northking Information and JS Corrugating into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Northking Information Technology and JS Corrugating Machinery, you can compare the effects of market volatilities on Northking Information and JS Corrugating 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 Northking Information with a short position of JS Corrugating. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northking Information and JS Corrugating.

Diversification Opportunities for Northking Information and JS Corrugating

0.86

Correlation Coefficient

Northking Information  JS Corrugating

Very poor diversification

The 3 months correlation between Northking and 000821 is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Northking Information Technolo and JS Corrugating Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Corrugating Machinery and Northking Information 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 Northking Information Technology are associated (or correlated) with JS Corrugating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Corrugating Machinery has no effect on the direction of Northking Information i.e., Northking Information and JS Corrugating go up and down completely randomly.

Pair Corralation between Northking Information and JS Corrugating

Assuming the 90 days trading horizon Northking Information Technology is expected to generate 1.84 times more return on investment than JS Corrugating. However, Northking Information is 1.84 times more volatile than JS Corrugating Machinery. It trades about 0.13 of its potential returns per unit of risk. JS Corrugating Machinery is currently generating about -0.01 per unit of risk. If you would invest  1,471  in Northking Information Technology on December 26, 2024 and sell it today you would earn a total of  419.00  from holding Northking Information Technology or generate 28.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.28%
Values	Daily Returns

Northking Information Technolo  vs.  JS Corrugating Machinery

Northking Information

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Northking Information Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Northking Information sustained solid returns over the last few months and may actually be approaching a breakup point.

JS Corrugating Machinery

Risk-Adjusted Performance

Very Weak

Over the last 90 days JS Corrugating Machinery has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, JS Corrugating is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Northking Information and JS Corrugating

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

The idea behind Northking Information Technology and JS Corrugating Machinery 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.