Correlation Between Robostar CoLtd and Nuintek CoLtd

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

By analyzing existing cross correlation between Robostar CoLtd and Nuintek CoLtd, you can compare the effects of market volatilities on Robostar CoLtd and Nuintek CoLtd 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 Robostar CoLtd with a short position of Nuintek CoLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Robostar CoLtd and Nuintek CoLtd.

Diversification Opportunities for Robostar CoLtd and Nuintek CoLtd

0.7

Correlation Coefficient

Robostar CoLtd  Nuintek CoLtd

Poor diversification

The 3 months correlation between Robostar and Nuintek is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Robostar CoLtd and Nuintek CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuintek CoLtd and Robostar CoLtd 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 Robostar CoLtd are associated (or correlated) with Nuintek CoLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuintek CoLtd has no effect on the direction of Robostar CoLtd i.e., Robostar CoLtd and Nuintek CoLtd go up and down completely randomly.

Pair Corralation between Robostar CoLtd and Nuintek CoLtd

Assuming the 90 days trading horizon Robostar CoLtd is expected to generate 1.7 times more return on investment than Nuintek CoLtd. However, Robostar CoLtd is 1.7 times more volatile than Nuintek CoLtd. It trades about -0.06 of its potential returns per unit of risk. Nuintek CoLtd is currently generating about -0.13 per unit of risk. If you would invest  2,260,000  in Robostar CoLtd on September 23, 2024 and sell it today you would lose (292,000) from holding Robostar CoLtd or give up 12.92% of portfolio value over 90 days.

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

Robostar CoLtd  vs.  Nuintek CoLtd

Robostar CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Robostar CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Nuintek CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nuintek CoLtd 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 January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Robostar CoLtd and Nuintek CoLtd

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

The idea behind Robostar CoLtd and Nuintek CoLtd 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..