Correlation Between Nanjing Putian and Caitong Securities

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

Diversification Opportunities for Nanjing Putian and Caitong Securities

0.24

Correlation Coefficient

Nanjing Putian  Caitong Securities

Modest diversification

The 3 months correlation between Nanjing and Caitong is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Putian Telecommunicati and Caitong Securities Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caitong Securities 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 Caitong Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caitong Securities has no effect on the direction of Nanjing Putian i.e., Nanjing Putian and Caitong Securities go up and down completely randomly.

Pair Corralation between Nanjing Putian and Caitong Securities

Assuming the 90 days trading horizon Nanjing Putian Telecommunications is expected to under-perform the Caitong Securities. In addition to that, Nanjing Putian is 2.24 times more volatile than Caitong Securities Co. It trades about -0.17 of its total potential returns per unit of risk. Caitong Securities Co is currently generating about -0.26 per unit of volatility. If you would invest  849.00  in Caitong Securities Co on October 10, 2024 and sell it today you would lose (86.00) from holding Caitong Securities Co or give up 10.13% of portfolio value over 90 days.

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

Nanjing Putian Telecommunicati  vs.  Caitong Securities Co

Nanjing Putian Telec

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Putian Telecommunications are ranked lower than 8 (%) 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.

Caitong Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Caitong Securities 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 Caitong Securities

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

The idea behind Nanjing Putian Telecommunications and Caitong Securities 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.