Correlation Between Aluminum Corp and Nanjing Putian

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

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

Diversification Opportunities for Aluminum Corp and Nanjing Putian

-0.4

Correlation Coefficient

Aluminum Corp  Nanjing Putian

Very good diversification

The 3 months correlation between Aluminum and Nanjing is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum Corp of 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 Aluminum Corp 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 Aluminum Corp of 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 Aluminum Corp i.e., Aluminum Corp and Nanjing Putian go up and down completely randomly.

Pair Corralation between Aluminum Corp and Nanjing Putian

Assuming the 90 days trading horizon Aluminum Corp is expected to generate 1.79 times less return on investment than Nanjing Putian. But when comparing it to its historical volatility, Aluminum Corp of is 1.71 times less risky than Nanjing Putian. It trades about 0.03 of its potential returns per unit of risk. Nanjing Putian Telecommunications is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  281.00  in Nanjing Putian Telecommunications on October 5, 2024 and sell it today you would earn a total of  59.00  from holding Nanjing Putian Telecommunications or generate 21.0% return on investment over 90 days.

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

Aluminum Corp of  vs.  Nanjing Putian Telecommunicati

Aluminum Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluminum Corp of 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.

Nanjing Putian Telec

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Putian Telecommunications are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nanjing Putian sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Aluminum Corp and Nanjing Putian

The main advantage of trading using opposite Aluminum Corp and Nanjing Putian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminum Corp 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 Aluminum Corp of 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.