Correlation Between Chongqing Shunbo and Niutech Environment

Can any of the company-specific risk be diversified away by investing in both Chongqing Shunbo and Niutech Environment 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 Chongqing Shunbo and Niutech Environment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Chongqing Shunbo Aluminum and Niutech Environment Technology, you can compare the effects of market volatilities on Chongqing Shunbo and Niutech Environment 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 Chongqing Shunbo with a short position of Niutech Environment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chongqing Shunbo and Niutech Environment.

Diversification Opportunities for Chongqing Shunbo and Niutech Environment

0.54

Correlation Coefficient

Chongqing Shunbo  Niutech Environment

Very weak diversification

The 3 months correlation between Chongqing and Niutech is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Chongqing Shunbo Aluminum and Niutech Environment Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Niutech Environment and Chongqing Shunbo 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 Chongqing Shunbo Aluminum are associated (or correlated) with Niutech Environment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Niutech Environment has no effect on the direction of Chongqing Shunbo i.e., Chongqing Shunbo and Niutech Environment go up and down completely randomly.

Pair Corralation between Chongqing Shunbo and Niutech Environment

Assuming the 90 days trading horizon Chongqing Shunbo Aluminum is expected to under-perform the Niutech Environment. But the stock apears to be less risky and, when comparing its historical volatility, Chongqing Shunbo Aluminum is 1.2 times less risky than Niutech Environment. The stock trades about -0.04 of its potential returns per unit of risk. The Niutech Environment Technology is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  2,181  in Niutech Environment Technology on October 6, 2024 and sell it today you would lose (979.00) from holding Niutech Environment Technology or give up 44.89% of portfolio value over 90 days.

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

Chongqing Shunbo Aluminum  vs.  Niutech Environment Technology

Chongqing Shunbo Aluminum

Risk-Adjusted Performance

0 of 100

Very Weak

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

Niutech Environment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Niutech Environment Technology 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 February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Chongqing Shunbo and Niutech Environment

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

The idea behind Chongqing Shunbo Aluminum and Niutech Environment Technology 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.