Correlation Between Ningbo Homelink and Eoptolink Technology

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

By analyzing existing cross correlation between Ningbo Homelink Eco iTech and Eoptolink Technology, you can compare the effects of market volatilities on Ningbo Homelink and Eoptolink Technology 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 Homelink with a short position of Eoptolink Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ningbo Homelink and Eoptolink Technology.

Diversification Opportunities for Ningbo Homelink and Eoptolink Technology

-0.04

Correlation Coefficient

Ningbo Homelink  Eoptolink Technology

Good diversification

The 3 months correlation between Ningbo and Eoptolink is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Ningbo Homelink Eco iTech and Eoptolink Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eoptolink Technology and Ningbo Homelink 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 Homelink Eco iTech are associated (or correlated) with Eoptolink Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eoptolink Technology has no effect on the direction of Ningbo Homelink i.e., Ningbo Homelink and Eoptolink Technology go up and down completely randomly.

Pair Corralation between Ningbo Homelink and Eoptolink Technology

Assuming the 90 days trading horizon Ningbo Homelink Eco iTech is expected to under-perform the Eoptolink Technology. But the stock apears to be less risky and, when comparing its historical volatility, Ningbo Homelink Eco iTech is 1.2 times less risky than Eoptolink Technology. The stock trades about -0.05 of its potential returns per unit of risk. The Eoptolink Technology is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  12,200  in Eoptolink Technology on October 25, 2024 and sell it today you would earn a total of  1,950  from holding Eoptolink Technology or generate 15.98% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Ningbo Homelink Eco iTech  vs.  Eoptolink Technology

Ningbo Homelink Eco

Risk-Adjusted Performance

0 of 100

Very Weak

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

Eoptolink Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Eoptolink Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Eoptolink Technology 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 Homelink and Eoptolink Technology

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

The idea behind Ningbo Homelink Eco iTech and Eoptolink Technology 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.