Correlation Between NURAN WIRELESS and ZTE

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

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

Diversification Opportunities for NURAN WIRELESS and ZTE

-0.31

Correlation Coefficient

NURAN WIRELESS  ZTE

Very good diversification

The 3 months correlation between NURAN and ZTE is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding NURAN WIRELESS INC and ZTE Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ZTE Corporation and NURAN WIRELESS 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 NURAN WIRELESS INC are associated (or correlated) with ZTE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ZTE Corporation has no effect on the direction of NURAN WIRELESS i.e., NURAN WIRELESS and ZTE go up and down completely randomly.

Pair Corralation between NURAN WIRELESS and ZTE

Assuming the 90 days trading horizon NURAN WIRELESS INC is expected to under-perform the ZTE. In addition to that, NURAN WIRELESS is 1.22 times more volatile than ZTE Corporation. It trades about 0.0 of its total potential returns per unit of risk. ZTE Corporation is currently generating about 0.09 per unit of volatility. If you would invest  266.00  in ZTE Corporation on December 20, 2024 and sell it today you would earn a total of  58.00  from holding ZTE Corporation or generate 21.8% return on investment over 90 days.

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

NURAN WIRELESS INC  vs.  ZTE Corp.

NURAN WIRELESS INC

Risk-Adjusted Performance

Very Weak

Over the last 90 days NURAN WIRELESS INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NURAN WIRELESS is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

ZTE Corporation

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ZTE Corporation are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, ZTE reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NURAN WIRELESS and ZTE

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

The idea behind NURAN WIRELESS INC and ZTE Corporation 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.