Correlation Between Zhuhai Comleader and Ningbo Jianan

Can any of the company-specific risk be diversified away by investing in both Zhuhai Comleader and Ningbo Jianan 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 Zhuhai Comleader and Ningbo Jianan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Zhuhai Comleader Information and Ningbo Jianan Electronics, you can compare the effects of market volatilities on Zhuhai Comleader and Ningbo Jianan 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 Zhuhai Comleader with a short position of Ningbo Jianan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Zhuhai Comleader and Ningbo Jianan.

Diversification Opportunities for Zhuhai Comleader and Ningbo Jianan

0.71

Correlation Coefficient

Zhuhai Comleader  Ningbo Jianan

Poor diversification

The 3 months correlation between Zhuhai and Ningbo is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Zhuhai Comleader Information and Ningbo Jianan Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Jianan Electronics and Zhuhai Comleader 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 Zhuhai Comleader Information are associated (or correlated) with Ningbo Jianan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Jianan Electronics has no effect on the direction of Zhuhai Comleader i.e., Zhuhai Comleader and Ningbo Jianan go up and down completely randomly.

Pair Corralation between Zhuhai Comleader and Ningbo Jianan

Assuming the 90 days trading horizon Zhuhai Comleader Information is expected to under-perform the Ningbo Jianan. In addition to that, Zhuhai Comleader is 1.13 times more volatile than Ningbo Jianan Electronics. It trades about -0.04 of its total potential returns per unit of risk. Ningbo Jianan Electronics is currently generating about 0.03 per unit of volatility. If you would invest  2,317  in Ningbo Jianan Electronics on December 26, 2024 and sell it today you would earn a total of  63.00  from holding Ningbo Jianan Electronics or generate 2.72% return on investment over 90 days.

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

Zhuhai Comleader Information  vs.  Ningbo Jianan Electronics

Zhuhai Comleader Inf

Risk-Adjusted Performance

Very Weak

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

Ningbo Jianan Electronics

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ningbo Jianan Electronics are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ningbo Jianan is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Zhuhai Comleader and Ningbo Jianan

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

The idea behind Zhuhai Comleader Information and Ningbo Jianan Electronics 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 Stocks Directory module to find actively traded stocks across global markets.