Correlation Between Guodian Nanjing and Fujian Boss

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

By analyzing existing cross correlation between Guodian Nanjing Automation and Fujian Boss Software, you can compare the effects of market volatilities on Guodian Nanjing and Fujian Boss 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 Guodian Nanjing with a short position of Fujian Boss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Guodian Nanjing and Fujian Boss.

Diversification Opportunities for Guodian Nanjing and Fujian Boss

0.76

Correlation Coefficient

Guodian Nanjing  Fujian Boss

Poor diversification

The 3 months correlation between Guodian and Fujian is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Guodian Nanjing Automation and Fujian Boss Software in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Boss Software and Guodian Nanjing 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 Guodian Nanjing Automation are associated (or correlated) with Fujian Boss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Boss Software has no effect on the direction of Guodian Nanjing i.e., Guodian Nanjing and Fujian Boss go up and down completely randomly.

Pair Corralation between Guodian Nanjing and Fujian Boss

Assuming the 90 days trading horizon Guodian Nanjing Automation is expected to generate 0.44 times more return on investment than Fujian Boss. However, Guodian Nanjing Automation is 2.26 times less risky than Fujian Boss. It trades about 0.11 of its potential returns per unit of risk. Fujian Boss Software is currently generating about 0.04 per unit of risk. If you would invest  690.00  in Guodian Nanjing Automation on December 26, 2024 and sell it today you would earn a total of  78.00  from holding Guodian Nanjing Automation or generate 11.3% return on investment over 90 days.

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

Guodian Nanjing Automation  vs.  Fujian Boss Software

Guodian Nanjing Auto

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Guodian Nanjing Automation are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guodian Nanjing sustained solid returns over the last few months and may actually be approaching a breakup point.

Fujian Boss Software

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Boss Software are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fujian Boss may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Guodian Nanjing and Fujian Boss

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

The idea behind Guodian Nanjing Automation and Fujian Boss Software 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.