Correlation Between Yili Chuanning and Nanjing OLO

Can any of the company-specific risk be diversified away by investing in both Yili Chuanning and Nanjing OLO 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 Yili Chuanning and Nanjing OLO into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Yili Chuanning Biotechnology and Nanjing OLO Home, you can compare the effects of market volatilities on Yili Chuanning and Nanjing OLO 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 Yili Chuanning with a short position of Nanjing OLO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yili Chuanning and Nanjing OLO.

Diversification Opportunities for Yili Chuanning and Nanjing OLO

0.27

Correlation Coefficient

Yili Chuanning  Nanjing OLO

Modest diversification

The 3 months correlation between Yili and Nanjing is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Yili Chuanning Biotechnology and Nanjing OLO Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing OLO Home and Yili Chuanning 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 Yili Chuanning Biotechnology are associated (or correlated) with Nanjing OLO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing OLO Home has no effect on the direction of Yili Chuanning i.e., Yili Chuanning and Nanjing OLO go up and down completely randomly.

Pair Corralation between Yili Chuanning and Nanjing OLO

Assuming the 90 days trading horizon Yili Chuanning Biotechnology is expected to under-perform the Nanjing OLO. But the stock apears to be less risky and, when comparing its historical volatility, Yili Chuanning Biotechnology is 1.3 times less risky than Nanjing OLO. The stock trades about -0.07 of its potential returns per unit of risk. The Nanjing OLO Home is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  626.00  in Nanjing OLO Home on October 25, 2024 and sell it today you would lose (11.00) from holding Nanjing OLO Home or give up 1.76% of portfolio value over 90 days.

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

Yili Chuanning Biotechnology  vs.  Nanjing OLO Home

Yili Chuanning Biote

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yili Chuanning Biotechnology 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.

Nanjing OLO Home

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Yili Chuanning and Nanjing OLO

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

The idea behind Yili Chuanning Biotechnology and Nanjing OLO Home 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.