Correlation Between Nan Yang and Carnival Industrial

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

By analyzing existing cross correlation between Nan Yang Dyeing and Carnival Industrial Corp, you can compare the effects of market volatilities on Nan Yang and Carnival Industrial 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 Nan Yang with a short position of Carnival Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Yang and Carnival Industrial.

Diversification Opportunities for Nan Yang and Carnival Industrial

0.73

Correlation Coefficient

Nan Yang  Carnival Industrial

Poor diversification

The 3 months correlation between Nan and Carnival is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Nan Yang Dyeing and Carnival Industrial Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Carnival Industrial Corp and Nan Yang 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 Nan Yang Dyeing are associated (or correlated) with Carnival Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Carnival Industrial Corp has no effect on the direction of Nan Yang i.e., Nan Yang and Carnival Industrial go up and down completely randomly.

Pair Corralation between Nan Yang and Carnival Industrial

Assuming the 90 days trading horizon Nan Yang Dyeing is expected to generate 0.9 times more return on investment than Carnival Industrial. However, Nan Yang Dyeing is 1.11 times less risky than Carnival Industrial. It trades about -0.1 of its potential returns per unit of risk. Carnival Industrial Corp is currently generating about -0.22 per unit of risk. If you would invest  3,680  in Nan Yang Dyeing on October 8, 2024 and sell it today you would lose (130.00) from holding Nan Yang Dyeing or give up 3.53% of portfolio value over 90 days.

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

Nan Yang Dyeing  vs.  Carnival Industrial Corp

Nan Yang Dyeing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nan Yang Dyeing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Nan Yang is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Carnival Industrial Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carnival Industrial Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Nan Yang and Carnival Industrial

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

The idea behind Nan Yang Dyeing and Carnival Industrial Corp 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.

Check out your portfolio center.

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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..