Correlation Between Nanning Chemical and Dosilicon

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

Diversification Opportunities for Nanning Chemical and Dosilicon

0.82

Correlation Coefficient

Nanning Chemical  Dosilicon

Very poor diversification

The 3 months correlation between Nanning and Dosilicon is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nanning Chemical Industry and Dosilicon Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dosilicon 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 Dosilicon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dosilicon has no effect on the direction of Nanning Chemical i.e., Nanning Chemical and Dosilicon go up and down completely randomly.

Pair Corralation between Nanning Chemical and Dosilicon

Assuming the 90 days trading horizon Nanning Chemical Industry is expected to generate 0.85 times more return on investment than Dosilicon. However, Nanning Chemical Industry is 1.17 times less risky than Dosilicon. It trades about 0.17 of its potential returns per unit of risk. Dosilicon Co is currently generating about 0.07 per unit of risk. If you would invest  1,786  in Nanning Chemical Industry on December 27, 2024 and sell it today you would earn a total of  545.00  from holding Nanning Chemical Industry or generate 30.52% return on investment over 90 days.

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

Nanning Chemical Industry  vs.  Dosilicon Co

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 13 (%) 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.

Dosilicon

Risk-Adjusted Performance

Modest

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

Pair Trading with Nanning Chemical and Dosilicon

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

The idea behind Nanning Chemical Industry and Dosilicon 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.