Correlation Between Touchstone International and Nanjing Vishee

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

By analyzing existing cross correlation between Touchstone International Medical and Nanjing Vishee Medical, you can compare the effects of market volatilities on Touchstone International and Nanjing Vishee 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 Touchstone International with a short position of Nanjing Vishee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Touchstone International and Nanjing Vishee.

Diversification Opportunities for Touchstone International and Nanjing Vishee

0.8

Correlation Coefficient

Touchstone International  Nanjing Vishee

Very poor diversification

The 3 months correlation between Touchstone and Nanjing is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Touchstone International Medic and Nanjing Vishee Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Vishee Medical and Touchstone International 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 Touchstone International Medical are associated (or correlated) with Nanjing Vishee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Vishee Medical has no effect on the direction of Touchstone International i.e., Touchstone International and Nanjing Vishee go up and down completely randomly.

Pair Corralation between Touchstone International and Nanjing Vishee

Assuming the 90 days trading horizon Touchstone International is expected to generate 2.18 times less return on investment than Nanjing Vishee. But when comparing it to its historical volatility, Touchstone International Medical is 1.53 times less risky than Nanjing Vishee. It trades about 0.08 of its potential returns per unit of risk. Nanjing Vishee Medical is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  2,885  in Nanjing Vishee Medical on December 28, 2024 and sell it today you would earn a total of  511.00  from holding Nanjing Vishee Medical or generate 17.71% return on investment over 90 days.

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

Touchstone International Medic  vs.  Nanjing Vishee Medical

Touchstone International

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Touchstone International Medical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Touchstone International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nanjing Vishee Medical

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Vishee Medical are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nanjing Vishee sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Touchstone International and Nanjing Vishee

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

The idea behind Touchstone International Medical and Nanjing Vishee Medical 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.