Correlation Between Nanjing Putian and SGSG Sciencetechnolog

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

Diversification Opportunities for Nanjing Putian and SGSG Sciencetechnolog

0.01

Correlation Coefficient

Nanjing Putian  SGSG Sciencetechnolog

Significant diversification

The 3 months correlation between Nanjing and SGSG is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Putian Telecommunicati and SGSG Sciencetechnology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SGSG Sciencetechnology 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 SGSG Sciencetechnolog. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SGSG Sciencetechnology has no effect on the direction of Nanjing Putian i.e., Nanjing Putian and SGSG Sciencetechnolog go up and down completely randomly.

Pair Corralation between Nanjing Putian and SGSG Sciencetechnolog

Assuming the 90 days trading horizon Nanjing Putian Telecommunications is expected to under-perform the SGSG Sciencetechnolog. But the stock apears to be less risky and, when comparing its historical volatility, Nanjing Putian Telecommunications is 1.97 times less risky than SGSG Sciencetechnolog. The stock trades about -0.04 of its potential returns per unit of risk. The SGSG Sciencetechnology Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  4,559  in SGSG Sciencetechnology Co on December 25, 2024 and sell it today you would lose (127.00) from holding SGSG Sciencetechnology Co or give up 2.79% of portfolio value over 90 days.

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

Nanjing Putian Telecommunicati  vs.  SGSG Sciencetechnology Co

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 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.

SGSG Sciencetechnology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SGSG Sciencetechnology Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SGSG Sciencetechnolog may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nanjing Putian and SGSG Sciencetechnolog

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

The idea behind Nanjing Putian Telecommunications and SGSG Sciencetechnology 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.

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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.