Correlation Between Northking Information and Cowealth Medical

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

Diversification Opportunities for Northking Information and Cowealth Medical

0.61

Correlation Coefficient

Northking Information  Cowealth Medical

Poor diversification

The 3 months correlation between Northking and Cowealth is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Northking Information Technolo and Cowealth Medical China in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cowealth Medical China 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 Cowealth Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cowealth Medical China has no effect on the direction of Northking Information i.e., Northking Information and Cowealth Medical go up and down completely randomly.

Pair Corralation between Northking Information and Cowealth Medical

Assuming the 90 days trading horizon Northking Information Technology is expected to generate 1.27 times more return on investment than Cowealth Medical. However, Northking Information is 1.27 times more volatile than Cowealth Medical China. It trades about 0.01 of its potential returns per unit of risk. Cowealth Medical China is currently generating about -0.02 per unit of risk. If you would invest  1,479  in Northking Information Technology on September 28, 2024 and sell it today you would lose (8.00) from holding Northking Information Technology or give up 0.54% of portfolio value over 90 days.

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

Northking Information Technolo  vs.  Cowealth Medical China

Northking Information

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Northking Information Technology are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Northking Information may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Cowealth Medical China

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cowealth Medical China are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cowealth Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Northking Information and Cowealth Medical

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

The idea behind Northking Information Technology and Cowealth Medical China 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.