Correlation Between Northking Information and Dalian Thermal

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

Diversification Opportunities for Northking Information and Dalian Thermal

-0.11

Correlation Coefficient

Northking Information  Dalian Thermal

Good diversification

The 3 months correlation between Northking and Dalian is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Northking Information Technolo and Dalian Thermal Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dalian Thermal Power 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 Dalian Thermal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dalian Thermal Power has no effect on the direction of Northking Information i.e., Northking Information and Dalian Thermal go up and down completely randomly.

Pair Corralation between Northking Information and Dalian Thermal

Assuming the 90 days trading horizon Northking Information Technology is expected to generate 1.36 times more return on investment than Dalian Thermal. However, Northking Information is 1.36 times more volatile than Dalian Thermal Power. It trades about 0.14 of its potential returns per unit of risk. Dalian Thermal Power is currently generating about -0.13 per unit of risk. If you would invest  1,550  in Northking Information Technology on December 4, 2024 and sell it today you would earn a total of  477.00  from holding Northking Information Technology or generate 30.77% return on investment over 90 days.

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

Northking Information Technolo  vs.  Dalian Thermal Power

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 11 (%) 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.

Dalian Thermal Power

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dalian Thermal Power has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Northking Information and Dalian Thermal

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

The idea behind Northking Information Technology and Dalian Thermal Power 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.