Correlation Between Ningbo Jianan and Risesun Real

Can any of the company-specific risk be diversified away by investing in both Ningbo Jianan and Risesun Real 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 Ningbo Jianan and Risesun Real into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ningbo Jianan Electronics and Risesun Real Estate, you can compare the effects of market volatilities on Ningbo Jianan and Risesun Real 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 Ningbo Jianan with a short position of Risesun Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Jianan and Risesun Real.

Diversification Opportunities for Ningbo Jianan and Risesun Real

0.68

Correlation Coefficient

Ningbo Jianan  Risesun Real

Poor diversification

The 3 months correlation between Ningbo and Risesun is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Jianan Electronics and Risesun Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Risesun Real Estate and Ningbo Jianan 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 Ningbo Jianan Electronics are associated (or correlated) with Risesun Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Risesun Real Estate has no effect on the direction of Ningbo Jianan i.e., Ningbo Jianan and Risesun Real go up and down completely randomly.

Pair Corralation between Ningbo Jianan and Risesun Real

Assuming the 90 days trading horizon Ningbo Jianan Electronics is expected to generate 0.77 times more return on investment than Risesun Real. However, Ningbo Jianan Electronics is 1.3 times less risky than Risesun Real. It trades about -0.13 of its potential returns per unit of risk. Risesun Real Estate is currently generating about -0.31 per unit of risk. If you would invest  2,415  in Ningbo Jianan Electronics on October 2, 2024 and sell it today you would lose (195.00) from holding Ningbo Jianan Electronics or give up 8.07% of portfolio value over 90 days.

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

Ningbo Jianan Electronics  vs.  Risesun Real Estate

Ningbo Jianan Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ningbo Jianan Electronics 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.

Risesun Real Estate

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Ningbo Jianan and Risesun Real

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

The idea behind Ningbo Jianan Electronics and Risesun Real Estate 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.