Correlation Between Yindu Kitchen and CNPC Capital

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

By analyzing existing cross correlation between Yindu Kitchen Equipment and CNPC Capital Co, you can compare the effects of market volatilities on Yindu Kitchen and CNPC Capital 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 Yindu Kitchen with a short position of CNPC Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Yindu Kitchen and CNPC Capital.

Diversification Opportunities for Yindu Kitchen and CNPC Capital

0.41

Correlation Coefficient

Yindu Kitchen  CNPC Capital

Very weak diversification

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

Pair Corralation between Yindu Kitchen and CNPC Capital

Assuming the 90 days trading horizon Yindu Kitchen Equipment is expected to under-perform the CNPC Capital. But the stock apears to be less risky and, when comparing its historical volatility, Yindu Kitchen Equipment is 1.35 times less risky than CNPC Capital. The stock trades about -0.02 of its potential returns per unit of risk. The CNPC Capital Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  619.00  in CNPC Capital Co on October 5, 2024 and sell it today you would earn a total of  47.00  from holding CNPC Capital Co or generate 7.59% return on investment over 90 days.

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

Yindu Kitchen Equipment  vs.  CNPC Capital Co

Yindu Kitchen Equipment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yindu Kitchen Equipment 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.

CNPC Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNPC Capital Co 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.

Pair Trading with Yindu Kitchen and CNPC Capital

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

The idea behind Yindu Kitchen Equipment and CNPC Capital Co 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.