Correlation Between Sanxiang Advanced and Nanjing Canatal

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

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

Diversification Opportunities for Sanxiang Advanced and Nanjing Canatal

-0.24

Correlation Coefficient

Sanxiang Advanced  Nanjing Canatal

Very good diversification

The 3 months correlation between Sanxiang and Nanjing is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Sanxiang Advanced Materials 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 Sanxiang Advanced 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 Sanxiang Advanced Materials 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 Sanxiang Advanced i.e., Sanxiang Advanced and Nanjing Canatal go up and down completely randomly.

Pair Corralation between Sanxiang Advanced and Nanjing Canatal

Assuming the 90 days trading horizon Sanxiang Advanced Materials is expected to generate 1.06 times more return on investment than Nanjing Canatal. However, Sanxiang Advanced is 1.06 times more volatile than Nanjing Canatal Data. It trades about 0.05 of its potential returns per unit of risk. Nanjing Canatal Data is currently generating about 0.01 per unit of risk. If you would invest  959.00  in Sanxiang Advanced Materials on October 10, 2024 and sell it today you would earn a total of  726.00  from holding Sanxiang Advanced Materials or generate 75.7% return on investment over 90 days.

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

Sanxiang Advanced Materials  vs.  Nanjing Canatal Data

Sanxiang Advanced

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sanxiang Advanced Materials are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sanxiang Advanced may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nanjing Canatal Data

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Canatal Data are ranked lower than 6 (%) 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 Sanxiang Advanced and Nanjing Canatal

The main advantage of trading using opposite Sanxiang Advanced and Nanjing Canatal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sanxiang Advanced 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 Sanxiang Advanced Materials 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.