Correlation Between Nanjing Putian and Runjian Communication

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

By analyzing existing cross correlation between Nanjing Putian Telecommunications and Runjian Communication Co, you can compare the effects of market volatilities on Nanjing Putian and Runjian Communication 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 Nanjing Putian with a short position of Runjian Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanjing Putian and Runjian Communication.

Diversification Opportunities for Nanjing Putian and Runjian Communication

0.12

Correlation Coefficient

Nanjing Putian  Runjian Communication

Average diversification

The 3 months correlation between Nanjing and Runjian is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Putian Telecommunicati and Runjian Communication Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Runjian Communication and Nanjing Putian 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 Nanjing Putian Telecommunications are associated (or correlated) with Runjian Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Runjian Communication has no effect on the direction of Nanjing Putian i.e., Nanjing Putian and Runjian Communication go up and down completely randomly.

Pair Corralation between Nanjing Putian and Runjian Communication

Assuming the 90 days trading horizon Nanjing Putian Telecommunications is expected to under-perform the Runjian Communication. In addition to that, Nanjing Putian is 1.18 times more volatile than Runjian Communication Co. It trades about -0.18 of its total potential returns per unit of risk. Runjian Communication Co is currently generating about 0.11 per unit of volatility. If you would invest  2,939  in Runjian Communication Co on October 5, 2024 and sell it today you would earn a total of  213.00  from holding Runjian Communication Co or generate 7.25% return on investment over 90 days.

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

Nanjing Putian Telecommunicati  vs.  Runjian Communication Co

Nanjing Putian Telec

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Putian Telecommunications are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nanjing Putian sustained solid returns over the last few months and may actually be approaching a breakup point.

Runjian Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Runjian Communication Co 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.

Pair Trading with Nanjing Putian and Runjian Communication

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

The idea behind Nanjing Putian Telecommunications and Runjian Communication Co 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.