Correlation Between Nanning Chemical and Anker Innovations

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

By analyzing existing cross correlation between Nanning Chemical Industry and Anker Innovations Technology, you can compare the effects of market volatilities on Nanning Chemical and Anker Innovations 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 Nanning Chemical with a short position of Anker Innovations. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanning Chemical and Anker Innovations.

Diversification Opportunities for Nanning Chemical and Anker Innovations

-0.19

Correlation Coefficient

Nanning Chemical  Anker Innovations

Good diversification

The 3 months correlation between Nanning and Anker is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Nanning Chemical Industry and Anker Innovations Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anker Innovations and Nanning Chemical 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 Nanning Chemical Industry are associated (or correlated) with Anker Innovations. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anker Innovations has no effect on the direction of Nanning Chemical i.e., Nanning Chemical and Anker Innovations go up and down completely randomly.

Pair Corralation between Nanning Chemical and Anker Innovations

Assuming the 90 days trading horizon Nanning Chemical Industry is expected to generate 1.12 times more return on investment than Anker Innovations. However, Nanning Chemical is 1.12 times more volatile than Anker Innovations Technology. It trades about 0.21 of its potential returns per unit of risk. Anker Innovations Technology is currently generating about 0.06 per unit of risk. If you would invest  1,751  in Nanning Chemical Industry on December 25, 2024 and sell it today you would earn a total of  662.00  from holding Nanning Chemical Industry or generate 37.81% return on investment over 90 days.

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

Nanning Chemical Industry  vs.  Anker Innovations Technology

Nanning Chemical Industry

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nanning Chemical Industry are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nanning Chemical sustained solid returns over the last few months and may actually be approaching a breakup point.

Anker Innovations

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Anker Innovations Technology are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Anker Innovations may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nanning Chemical and Anker Innovations

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

The idea behind Nanning Chemical Industry and Anker Innovations Technology 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.