Correlation Between Industrial and Nanjing Putian

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

By analyzing existing cross correlation between Industrial and Commercial and Nanjing Putian Telecommunications, you can compare the effects of market volatilities on Industrial and Nanjing Putian 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 Industrial with a short position of Nanjing Putian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Industrial and Nanjing Putian.

Diversification Opportunities for Industrial and Nanjing Putian

-0.54

Correlation Coefficient

Industrial  Nanjing Putian

Excellent diversification

The 3 months correlation between Industrial and Nanjing is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Industrial and Commercial and Nanjing Putian Telecommunicati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Putian Telec and Industrial 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 Industrial and Commercial are associated (or correlated) with Nanjing Putian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Putian Telec has no effect on the direction of Industrial i.e., Industrial and Nanjing Putian go up and down completely randomly.

Pair Corralation between Industrial and Nanjing Putian

Assuming the 90 days trading horizon Industrial and Commercial is expected to generate 0.34 times more return on investment than Nanjing Putian. However, Industrial and Commercial is 2.91 times less risky than Nanjing Putian. It trades about 0.16 of its potential returns per unit of risk. Nanjing Putian Telecommunications is currently generating about -0.07 per unit of risk. If you would invest  613.00  in Industrial and Commercial on December 2, 2024 and sell it today you would earn a total of  74.00  from holding Industrial and Commercial or generate 12.07% return on investment over 90 days.

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

Industrial and Commercial  vs.  Nanjing Putian Telecommunicati

Industrial and Commercial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial and Commercial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Nanjing Putian Telec

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nanjing Putian Telecommunications 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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Industrial and Nanjing Putian

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

The idea behind Industrial and Commercial and Nanjing Putian Telecommunications 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.