Correlation Between Nanning Chemical and GalaxyCore

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

Diversification Opportunities for Nanning Chemical and GalaxyCore

0.34

Correlation Coefficient

Nanning Chemical  GalaxyCore

Weak diversification

The 3 months correlation between Nanning and GalaxyCore is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Nanning Chemical Industry and GalaxyCore in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GalaxyCore 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 GalaxyCore. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GalaxyCore has no effect on the direction of Nanning Chemical i.e., Nanning Chemical and GalaxyCore go up and down completely randomly.

Pair Corralation between Nanning Chemical and GalaxyCore

Assuming the 90 days trading horizon Nanning Chemical Industry is expected to under-perform the GalaxyCore. But the stock apears to be less risky and, when comparing its historical volatility, Nanning Chemical Industry is 1.36 times less risky than GalaxyCore. The stock trades about -0.02 of its potential returns per unit of risk. The GalaxyCore is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,207  in GalaxyCore on October 8, 2024 and sell it today you would earn a total of  81.00  from holding GalaxyCore or generate 6.71% return on investment over 90 days.

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

Nanning Chemical Industry  vs.  GalaxyCore

Nanning Chemical Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nanning Chemical Industry has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

GalaxyCore

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GalaxyCore has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Nanning Chemical and GalaxyCore

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

The idea behind Nanning Chemical Industry and GalaxyCore 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.