Correlation Between Northern United and Guangdong Marubi

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

By analyzing existing cross correlation between Northern United Publishing and Guangdong Marubi Biotechnology, you can compare the effects of market volatilities on Northern United and Guangdong Marubi 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 Northern United with a short position of Guangdong Marubi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern United and Guangdong Marubi.

Diversification Opportunities for Northern United and Guangdong Marubi

0.34

Correlation Coefficient

Northern United  Guangdong Marubi

Weak diversification

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

Pair Corralation between Northern United and Guangdong Marubi

Assuming the 90 days trading horizon Northern United Publishing is expected to under-perform the Guangdong Marubi. In addition to that, Northern United is 1.13 times more volatile than Guangdong Marubi Biotechnology. It trades about -0.01 of its total potential returns per unit of risk. Guangdong Marubi Biotechnology is currently generating about 0.03 per unit of volatility. If you would invest  2,975  in Guangdong Marubi Biotechnology on October 9, 2024 and sell it today you would earn a total of  265.00  from holding Guangdong Marubi Biotechnology or generate 8.91% return on investment over 90 days.

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

Northern United Publishing  vs.  Guangdong Marubi Biotechnology

Northern United Publ

Risk-Adjusted Performance

1 of 100

Very Weak

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

Guangdong Marubi Bio

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Marubi Biotechnology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Marubi sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Northern United and Guangdong Marubi

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

The idea behind Northern United Publishing and Guangdong Marubi Biotechnology 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.