Correlation Between Nanjing Putian and Bosera CMSK

Can any of the company-specific risk be diversified away by investing in both Nanjing Putian and Bosera CMSK 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 Bosera CMSK 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 Bosera CMSK Industrial, you can compare the effects of market volatilities on Nanjing Putian and Bosera CMSK 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 Bosera CMSK. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanjing Putian and Bosera CMSK.

Diversification Opportunities for Nanjing Putian and Bosera CMSK

0.06

Correlation Coefficient

Nanjing Putian  Bosera CMSK

Significant diversification

The 3 months correlation between Nanjing and Bosera is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Putian Telecommunicati and Bosera CMSK Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bosera CMSK Industrial 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 Bosera CMSK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bosera CMSK Industrial has no effect on the direction of Nanjing Putian i.e., Nanjing Putian and Bosera CMSK go up and down completely randomly.

Pair Corralation between Nanjing Putian and Bosera CMSK

Assuming the 90 days trading horizon Nanjing Putian Telecommunications is expected to under-perform the Bosera CMSK. In addition to that, Nanjing Putian is 2.51 times more volatile than Bosera CMSK Industrial. It trades about -0.02 of its total potential returns per unit of risk. Bosera CMSK Industrial is currently generating about 0.23 per unit of volatility. If you would invest  201.00  in Bosera CMSK Industrial on December 26, 2024 and sell it today you would earn a total of  32.00  from holding Bosera CMSK Industrial or generate 15.92% 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.  Bosera CMSK Industrial

Nanjing Putian Telec

Risk-Adjusted Performance

Very Weak

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

Bosera CMSK Industrial

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Bosera CMSK Industrial are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bosera CMSK sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nanjing Putian and Bosera CMSK

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

The idea behind Nanjing Putian Telecommunications and Bosera CMSK Industrial 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.