Correlation Between Nuode Investment and Guangzhou Zhujiang

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

By analyzing existing cross correlation between Nuode Investment Co and Guangzhou Zhujiang Brewery, you can compare the effects of market volatilities on Nuode Investment and Guangzhou Zhujiang 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 Nuode Investment with a short position of Guangzhou Zhujiang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuode Investment and Guangzhou Zhujiang.

Diversification Opportunities for Nuode Investment and Guangzhou Zhujiang

0.52

Correlation Coefficient

Nuode Investment  Guangzhou Zhujiang

Very weak diversification

The 3 months correlation between Nuode and Guangzhou is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Nuode Investment Co and Guangzhou Zhujiang Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangzhou Zhujiang and Nuode Investment 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 Nuode Investment Co are associated (or correlated) with Guangzhou Zhujiang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangzhou Zhujiang has no effect on the direction of Nuode Investment i.e., Nuode Investment and Guangzhou Zhujiang go up and down completely randomly.

Pair Corralation between Nuode Investment and Guangzhou Zhujiang

Assuming the 90 days trading horizon Nuode Investment Co is expected to generate 1.9 times more return on investment than Guangzhou Zhujiang. However, Nuode Investment is 1.9 times more volatile than Guangzhou Zhujiang Brewery. It trades about 0.24 of its potential returns per unit of risk. Guangzhou Zhujiang Brewery is currently generating about 0.14 per unit of risk. If you would invest  269.00  in Nuode Investment Co on September 14, 2024 and sell it today you would earn a total of  206.00  from holding Nuode Investment Co or generate 76.58% return on investment over 90 days.

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

Nuode Investment Co  vs.  Guangzhou Zhujiang Brewery

Nuode Investment

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nuode Investment Co are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nuode Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Guangzhou Zhujiang

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guangzhou Zhujiang Brewery are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangzhou Zhujiang sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuode Investment and Guangzhou Zhujiang

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

The idea behind Nuode Investment Co and Guangzhou Zhujiang Brewery 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .