Correlation Between 516220 and Hunan Nanling

Can any of the company-specific risk be diversified away by investing in both 516220 and Hunan Nanling 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 516220 and Hunan Nanling into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between 516220 and Hunan Nanling Industrial, you can compare the effects of market volatilities on 516220 and Hunan Nanling 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 516220 with a short position of Hunan Nanling. Check out your portfolio center. Please also check ongoing floating volatility patterns of 516220 and Hunan Nanling.

Diversification Opportunities for 516220 and Hunan Nanling

0.62

Correlation Coefficient

516220  Hunan Nanling

Poor diversification

The 3 months correlation between 516220 and Hunan is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding 516220 and Hunan Nanling Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Nanling Industrial and 516220 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 516220 are associated (or correlated) with Hunan Nanling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Nanling Industrial has no effect on the direction of 516220 i.e., 516220 and Hunan Nanling go up and down completely randomly.

Pair Corralation between 516220 and Hunan Nanling

Assuming the 90 days trading horizon 516220 is expected to generate 0.62 times more return on investment than Hunan Nanling. However, 516220 is 1.62 times less risky than Hunan Nanling. It trades about -0.04 of its potential returns per unit of risk. Hunan Nanling Industrial is currently generating about -0.11 per unit of risk. If you would invest  67.00  in 516220 on December 1, 2024 and sell it today you would lose (2.00) from holding 516220 or give up 2.99% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

516220  vs.  Hunan Nanling Industrial

516220

Risk-Adjusted Performance

Very Weak

Over the last 90 days 516220 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 516220 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hunan Nanling Industrial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Hunan Nanling Industrial 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.

Pair Trading with 516220 and Hunan Nanling

The main advantage of trading using opposite 516220 and Hunan Nanling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 516220 position performs unexpectedly, Hunan Nanling 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 Hunan Nanling will offset losses from the drop in Hunan Nanling's long position.

The idea behind 516220 and Hunan Nanling Industrial 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.