Correlation Between Nancal Energy and Fujian Newland

Can any of the company-specific risk be diversified away by investing in both Nancal Energy and Fujian Newland 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 Nancal Energy and Fujian Newland into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nancal Energy Saving Tech and Fujian Newland Computer, you can compare the effects of market volatilities on Nancal Energy and Fujian Newland 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 Nancal Energy with a short position of Fujian Newland. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nancal Energy and Fujian Newland.

Diversification Opportunities for Nancal Energy and Fujian Newland

0.93

Correlation Coefficient

Nancal Energy  Fujian Newland

Almost no diversification

The 3 months correlation between Nancal and Fujian is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Nancal Energy Saving Tech and Fujian Newland Computer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fujian Newland Computer and Nancal Energy 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 Nancal Energy Saving Tech are associated (or correlated) with Fujian Newland. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fujian Newland Computer has no effect on the direction of Nancal Energy i.e., Nancal Energy and Fujian Newland go up and down completely randomly.

Pair Corralation between Nancal Energy and Fujian Newland

Assuming the 90 days trading horizon Nancal Energy Saving Tech is expected to generate 1.23 times more return on investment than Fujian Newland. However, Nancal Energy is 1.23 times more volatile than Fujian Newland Computer. It trades about 0.28 of its potential returns per unit of risk. Fujian Newland Computer is currently generating about 0.27 per unit of risk. If you would invest  1,454  in Nancal Energy Saving Tech on September 4, 2024 and sell it today you would earn a total of  1,565  from holding Nancal Energy Saving Tech or generate 107.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.28%
Values	Daily Returns

Nancal Energy Saving Tech  vs.  Fujian Newland Computer

Nancal Energy Saving

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nancal Energy Saving Tech are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nancal Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Fujian Newland Computer

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Fujian Newland Computer are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Fujian Newland sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nancal Energy and Fujian Newland

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

The idea behind Nancal Energy Saving Tech and Fujian Newland Computer 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.