Correlation Between Nanjing Putian and Guobo Electronics

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

Diversification Opportunities for Nanjing Putian and Guobo Electronics

0.38

Correlation Coefficient

Nanjing Putian  Guobo Electronics

Weak diversification

The 3 months correlation between Nanjing and Guobo is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Putian Telecommunicati and Guobo Electronics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guobo Electronics 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 Guobo Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guobo Electronics has no effect on the direction of Nanjing Putian i.e., Nanjing Putian and Guobo Electronics go up and down completely randomly.

Pair Corralation between Nanjing Putian and Guobo Electronics

Assuming the 90 days trading horizon Nanjing Putian Telecommunications is expected to under-perform the Guobo Electronics. In addition to that, Nanjing Putian is 1.82 times more volatile than Guobo Electronics Co. It trades about -0.15 of its total potential returns per unit of risk. Guobo Electronics Co is currently generating about -0.19 per unit of volatility. If you would invest  5,009  in Guobo Electronics Co on October 6, 2024 and sell it today you would lose (449.00) from holding Guobo Electronics Co or give up 8.96% 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.  Guobo Electronics Co

Nanjing Putian Telec

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Putian Telecommunications are ranked lower than 9 (%) 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.

Guobo Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Guobo Electronics Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Nanjing Putian and Guobo Electronics

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

The idea behind Nanjing Putian Telecommunications and Guobo Electronics 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 CEOs Directory module to screen CEOs from public companies around the world.