Correlation Between AUPU Home and Nanjing Canatal

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

By analyzing existing cross correlation between AUPU Home Style and Nanjing Canatal Data, you can compare the effects of market volatilities on AUPU Home and Nanjing Canatal 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 AUPU Home with a short position of Nanjing Canatal. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUPU Home and Nanjing Canatal.

Diversification Opportunities for AUPU Home and Nanjing Canatal

0.15

Correlation Coefficient

AUPU Home  Nanjing Canatal

Average diversification

The 3 months correlation between AUPU and Nanjing is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding AUPU Home Style and Nanjing Canatal Data in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Canatal Data and AUPU Home 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 AUPU Home Style are associated (or correlated) with Nanjing Canatal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Canatal Data has no effect on the direction of AUPU Home i.e., AUPU Home and Nanjing Canatal go up and down completely randomly.

Pair Corralation between AUPU Home and Nanjing Canatal

Assuming the 90 days trading horizon AUPU Home Style is expected to under-perform the Nanjing Canatal. But the stock apears to be less risky and, when comparing its historical volatility, AUPU Home Style is 2.46 times less risky than Nanjing Canatal. The stock trades about -0.02 of its potential returns per unit of risk. The Nanjing Canatal Data is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  831.00  in Nanjing Canatal Data on December 25, 2024 and sell it today you would earn a total of  217.00  from holding Nanjing Canatal Data or generate 26.11% return on investment over 90 days.

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

AUPU Home Style  vs.  Nanjing Canatal Data

AUPU Home Style

Risk-Adjusted Performance

Very Weak

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

Nanjing Canatal Data

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Canatal Data are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nanjing Canatal sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AUPU Home and Nanjing Canatal

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

The idea behind AUPU Home Style and Nanjing Canatal Data 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.