Correlation Between Shanghai Rural and Northking Information

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

By analyzing existing cross correlation between Shanghai Rural Commercial and Northking Information Technology, you can compare the effects of market volatilities on Shanghai Rural and Northking Information 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 Shanghai Rural with a short position of Northking Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai Rural and Northking Information.

Diversification Opportunities for Shanghai Rural and Northking Information

-0.41

Correlation Coefficient

Shanghai Rural  Northking Information

Very good diversification

The 3 months correlation between Shanghai and Northking is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai Rural Commercial and Northking Information Technolo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northking Information and Shanghai Rural 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 Shanghai Rural Commercial are associated (or correlated) with Northking Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northking Information has no effect on the direction of Shanghai Rural i.e., Shanghai Rural and Northking Information go up and down completely randomly.

Pair Corralation between Shanghai Rural and Northking Information

Assuming the 90 days trading horizon Shanghai Rural Commercial is expected to generate 0.47 times more return on investment than Northking Information. However, Shanghai Rural Commercial is 2.11 times less risky than Northking Information. It trades about 0.08 of its potential returns per unit of risk. Northking Information Technology is currently generating about 0.03 per unit of risk. If you would invest  499.00  in Shanghai Rural Commercial on December 4, 2024 and sell it today you would earn a total of  299.00  from holding Shanghai Rural Commercial or generate 59.92% return on investment over 90 days.

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

Shanghai Rural Commercial  vs.  Northking Information Technolo

Shanghai Rural Commercial

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shanghai Rural Commercial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Shanghai Rural is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Northking Information

Risk-Adjusted Performance

Good

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

Pair Trading with Shanghai Rural and Northking Information

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

The idea behind Shanghai Rural Commercial and Northking Information Technology 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.