Correlation Between Dalian Thermal and NAURA Technology

Can any of the company-specific risk be diversified away by investing in both Dalian Thermal and NAURA Technology 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 Dalian Thermal and NAURA Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Dalian Thermal Power and NAURA Technology Group, you can compare the effects of market volatilities on Dalian Thermal and NAURA Technology 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 Dalian Thermal with a short position of NAURA Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dalian Thermal and NAURA Technology.

Diversification Opportunities for Dalian Thermal and NAURA Technology

-0.17

Correlation Coefficient

Dalian Thermal  NAURA Technology

Good diversification

The 3 months correlation between Dalian and NAURA is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Dalian Thermal Power and NAURA Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAURA Technology and Dalian Thermal 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 Dalian Thermal Power are associated (or correlated) with NAURA Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAURA Technology has no effect on the direction of Dalian Thermal i.e., Dalian Thermal and NAURA Technology go up and down completely randomly.

Pair Corralation between Dalian Thermal and NAURA Technology

Assuming the 90 days trading horizon Dalian Thermal is expected to generate 2.37 times less return on investment than NAURA Technology. In addition to that, Dalian Thermal is 1.01 times more volatile than NAURA Technology Group. It trades about 0.02 of its total potential returns per unit of risk. NAURA Technology Group is currently generating about 0.05 per unit of volatility. If you would invest  40,528  in NAURA Technology Group on December 26, 2024 and sell it today you would earn a total of  2,360  from holding NAURA Technology Group or generate 5.82% return on investment over 90 days.

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

Dalian Thermal Power  vs.  NAURA Technology Group

Dalian Thermal Power

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dalian Thermal Power are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Dalian Thermal is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

NAURA Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NAURA Technology Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NAURA Technology may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Dalian Thermal and NAURA Technology

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

The idea behind Dalian Thermal Power and NAURA Technology Group 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.