Correlation Between Nan Liu and San Neng

Can any of the company-specific risk be diversified away by investing in both Nan Liu and San Neng 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 Nan Liu and San Neng into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nan Liu Enterprise and San Neng Group, you can compare the effects of market volatilities on Nan Liu and San Neng 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 Nan Liu with a short position of San Neng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nan Liu and San Neng.

Diversification Opportunities for Nan Liu and San Neng

-0.15

Correlation Coefficient

Nan Liu  San Neng

Good diversification

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

Pair Corralation between Nan Liu and San Neng

Assuming the 90 days trading horizon Nan Liu Enterprise is expected to under-perform the San Neng. In addition to that, Nan Liu is 2.0 times more volatile than San Neng Group. It trades about -0.08 of its total potential returns per unit of risk. San Neng Group is currently generating about 0.08 per unit of volatility. If you would invest  4,175  in San Neng Group on December 27, 2024 and sell it today you would earn a total of  130.00  from holding San Neng Group or generate 3.11% return on investment over 90 days.

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

Nan Liu Enterprise  vs.  San Neng Group

Nan Liu Enterprise

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nan Liu Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

San Neng Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in San Neng Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, San Neng is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Nan Liu and San Neng

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

The idea behind Nan Liu Enterprise and San Neng Group 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.