Correlation Between Niutech Environment and Shenzhen MYS

Can any of the company-specific risk be diversified away by investing in both Niutech Environment and Shenzhen MYS 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 Niutech Environment and Shenzhen MYS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Niutech Environment Technology and Shenzhen MYS Environmental, you can compare the effects of market volatilities on Niutech Environment and Shenzhen MYS 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 Niutech Environment with a short position of Shenzhen MYS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Niutech Environment and Shenzhen MYS.

Diversification Opportunities for Niutech Environment and Shenzhen MYS

0.51

Correlation Coefficient

Niutech Environment  Shenzhen MYS

Very weak diversification

The 3 months correlation between Niutech and Shenzhen is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Niutech Environment Technology and Shenzhen MYS Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenzhen MYS Environ and Niutech Environment 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 Niutech Environment Technology are associated (or correlated) with Shenzhen MYS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenzhen MYS Environ has no effect on the direction of Niutech Environment i.e., Niutech Environment and Shenzhen MYS go up and down completely randomly.

Pair Corralation between Niutech Environment and Shenzhen MYS

Assuming the 90 days trading horizon Niutech Environment Technology is expected to under-perform the Shenzhen MYS. But the stock apears to be less risky and, when comparing its historical volatility, Niutech Environment Technology is 1.14 times less risky than Shenzhen MYS. The stock trades about -0.08 of its potential returns per unit of risk. The Shenzhen MYS Environmental is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  346.00  in Shenzhen MYS Environmental on October 3, 2024 and sell it today you would earn a total of  12.00  from holding Shenzhen MYS Environmental or generate 3.47% return on investment over 90 days.

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

Niutech Environment Technology  vs.  Shenzhen MYS Environmental

Niutech Environment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Niutech Environment Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Shenzhen MYS Environ

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenzhen MYS Environmental are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Shenzhen MYS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Niutech Environment and Shenzhen MYS

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

The idea behind Niutech Environment Technology and Shenzhen MYS Environmental 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.