Correlation Between Northking Information and Nantong Haixing

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

Diversification Opportunities for Northking Information and Nantong Haixing

0.81

Correlation Coefficient

Northking Information  Nantong Haixing

Very poor diversification

The 3 months correlation between Northking and Nantong is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Northking Information Technolo and Nantong Haixing Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nantong Haixing Elec 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 Nantong Haixing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nantong Haixing Elec has no effect on the direction of Northking Information i.e., Northking Information and Nantong Haixing go up and down completely randomly.

Pair Corralation between Northking Information and Nantong Haixing

Assuming the 90 days trading horizon Northking Information Technology is expected to generate 1.48 times more return on investment than Nantong Haixing. However, Northking Information is 1.48 times more volatile than Nantong Haixing Electronics. It trades about 0.1 of its potential returns per unit of risk. Nantong Haixing Electronics is currently generating about 0.05 per unit of risk. If you would invest  1,140  in Northking Information Technology on December 8, 2024 and sell it today you would earn a total of  1,070  from holding Northking Information Technology or generate 93.86% return on investment over 90 days.

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

Northking Information Technolo  vs.  Nantong Haixing Electronics

Northking Information

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northking Information Technology are ranked lower than 14 (%) 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.

Nantong Haixing Elec

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nantong Haixing Electronics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nantong Haixing may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Northking Information and Nantong Haixing

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

The idea behind Northking Information Technology and Nantong Haixing Electronics 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.