Correlation Between Nanjing Canatal and Anhui Tongguan

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

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

Diversification Opportunities for Nanjing Canatal and Anhui Tongguan

0.05

Correlation Coefficient

Nanjing Canatal  Anhui Tongguan

Significant diversification

The 3 months correlation between Nanjing and Anhui is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Canatal Data and Anhui Tongguan Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anhui Tongguan Copper and Nanjing Canatal 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 Nanjing Canatal Data are associated (or correlated) with Anhui Tongguan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anhui Tongguan Copper has no effect on the direction of Nanjing Canatal i.e., Nanjing Canatal and Anhui Tongguan go up and down completely randomly.

Pair Corralation between Nanjing Canatal and Anhui Tongguan

Assuming the 90 days trading horizon Nanjing Canatal Data is expected to generate 1.73 times more return on investment than Anhui Tongguan. However, Nanjing Canatal is 1.73 times more volatile than Anhui Tongguan Copper. It trades about 0.09 of its potential returns per unit of risk. Anhui Tongguan Copper is currently generating about -0.13 per unit of risk. If you would invest  777.00  in Nanjing Canatal Data on October 11, 2024 and sell it today you would earn a total of  64.00  from holding Nanjing Canatal Data or generate 8.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Nanjing Canatal Data  vs.  Anhui Tongguan Copper

Nanjing Canatal Data

Risk-Adjusted Performance

9 of 100

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.

Anhui Tongguan Copper

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nanjing Canatal and Anhui Tongguan

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

The idea behind Nanjing Canatal Data and Anhui Tongguan Copper 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.