Correlation Between Nancal Energy and Guangdong Jingyi

Can any of the company-specific risk be diversified away by investing in both Nancal Energy and Guangdong Jingyi 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 Guangdong Jingyi 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 Guangdong Jingyi Metal, you can compare the effects of market volatilities on Nancal Energy and Guangdong Jingyi 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 Guangdong Jingyi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nancal Energy and Guangdong Jingyi.

Diversification Opportunities for Nancal Energy and Guangdong Jingyi

0.88

Correlation Coefficient

Nancal Energy  Guangdong Jingyi

Very poor diversification

The 3 months correlation between Nancal and Guangdong is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Nancal Energy Saving Tech and Guangdong Jingyi Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guangdong Jingyi Metal 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 Guangdong Jingyi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guangdong Jingyi Metal has no effect on the direction of Nancal Energy i.e., Nancal Energy and Guangdong Jingyi go up and down completely randomly.

Pair Corralation between Nancal Energy and Guangdong Jingyi

Assuming the 90 days trading horizon Nancal Energy Saving Tech is expected to under-perform the Guangdong Jingyi. In addition to that, Nancal Energy is 1.2 times more volatile than Guangdong Jingyi Metal. It trades about -0.55 of its total potential returns per unit of risk. Guangdong Jingyi Metal is currently generating about -0.31 per unit of volatility. If you would invest  758.00  in Guangdong Jingyi Metal on October 9, 2024 and sell it today you would lose (138.00) from holding Guangdong Jingyi Metal or give up 18.21% of portfolio value over 90 days.

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

Nancal Energy Saving Tech  vs.  Guangdong Jingyi Metal

Nancal Energy Saving

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nancal Energy Saving Tech are ranked lower than 8 (%) 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.

Guangdong Jingyi Metal

Risk-Adjusted Performance

5 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Guangdong Jingyi Metal are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guangdong Jingyi may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nancal Energy and Guangdong Jingyi

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

The idea behind Nancal Energy Saving Tech and Guangdong Jingyi Metal 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.