Correlation Between Nanjing Putian and Shandong Huifa

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Nanjing Putian and Shandong Huifa 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 Shandong Huifa 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 Shandong Huifa Foodstuff, you can compare the effects of market volatilities on Nanjing Putian and Shandong Huifa 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 Shandong Huifa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanjing Putian and Shandong Huifa.

Diversification Opportunities for Nanjing Putian and Shandong Huifa

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Nanjing and Shandong is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Putian Telecommunicati and Shandong Huifa Foodstuff in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shandong Huifa Foodstuff 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 Shandong Huifa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shandong Huifa Foodstuff has no effect on the direction of Nanjing Putian i.e., Nanjing Putian and Shandong Huifa go up and down completely randomly.

Pair Corralation between Nanjing Putian and Shandong Huifa

Assuming the 90 days trading horizon Nanjing Putian Telecommunications is expected to generate 1.05 times more return on investment than Shandong Huifa. However, Nanjing Putian is 1.05 times more volatile than Shandong Huifa Foodstuff. It trades about 0.33 of its potential returns per unit of risk. Shandong Huifa Foodstuff is currently generating about 0.29 per unit of risk. If you would invest  192.00  in Nanjing Putian Telecommunications on September 13, 2024 and sell it today you would earn a total of  244.00  from holding Nanjing Putian Telecommunications or generate 127.08% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Nanjing Putian Telecommunicati  vs.  Shandong Huifa Foodstuff

 Performance 
       Timeline  
Nanjing Putian Telec 

Risk-Adjusted Performance

26 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Putian Telecommunications are ranked lower than 26 (%) 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.
Shandong Huifa Foodstuff 

Risk-Adjusted Performance

23 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Shandong Huifa Foodstuff are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shandong Huifa sustained solid returns over the last few months and may actually be approaching a breakup point.

Nanjing Putian and Shandong Huifa Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nanjing Putian and Shandong Huifa

The main advantage of trading using opposite Nanjing Putian and Shandong Huifa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanjing Putian position performs unexpectedly, Shandong Huifa 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 Shandong Huifa will offset losses from the drop in Shandong Huifa's long position.
The idea behind Nanjing Putian Telecommunications and Shandong Huifa Foodstuff 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.

Other Complementary Tools

Performance Analysis
Check effects of mean-variance optimization against your current asset allocation
Idea Breakdown
Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes
Watchlist Optimization
Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm
ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments
Global Correlations
Find global opportunities by holding instruments from different markets