Correlation Between Nuode Investment and Hengdian Entertainment

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Can any of the company-specific risk be diversified away by investing in both Nuode Investment and Hengdian Entertainment 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 Hengdian Entertainment 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 Hengdian Entertainment Co, you can compare the effects of market volatilities on Nuode Investment and Hengdian Entertainment 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 Hengdian Entertainment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nuode Investment and Hengdian Entertainment.

Diversification Opportunities for Nuode Investment and Hengdian Entertainment

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Nuode and Hengdian is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Nuode Investment Co and Hengdian Entertainment Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hengdian Entertainment 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 Hengdian Entertainment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hengdian Entertainment has no effect on the direction of Nuode Investment i.e., Nuode Investment and Hengdian Entertainment go up and down completely randomly.

Pair Corralation between Nuode Investment and Hengdian Entertainment

Assuming the 90 days trading horizon Nuode Investment is expected to generate 2.13 times less return on investment than Hengdian Entertainment. But when comparing it to its historical volatility, Nuode Investment Co is 1.02 times less risky than Hengdian Entertainment. It trades about 0.03 of its potential returns per unit of risk. Hengdian Entertainment Co is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,149  in Hengdian Entertainment Co on October 10, 2024 and sell it today you would earn a total of  142.00  from holding Hengdian Entertainment Co or generate 12.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Nuode Investment Co  vs.  Hengdian Entertainment Co

 Performance 
       Timeline  
Nuode Investment 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Nuode Investment Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nuode Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.
Hengdian Entertainment 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Hengdian Entertainment Co are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hengdian Entertainment sustained solid returns over the last few months and may actually be approaching a breakup point.

Nuode Investment and Hengdian Entertainment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nuode Investment and Hengdian Entertainment

The main advantage of trading using opposite Nuode Investment and Hengdian Entertainment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nuode Investment position performs unexpectedly, Hengdian Entertainment 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 Hengdian Entertainment will offset losses from the drop in Hengdian Entertainment's long position.
The idea behind Nuode Investment Co and Hengdian Entertainment Co 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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