Correlation Between Shanghai V and NAURA Technology

Can any of the company-specific risk be diversified away by investing in both Shanghai V and NAURA Technology 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 Shanghai V and NAURA Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shanghai V Test Semiconductor and NAURA Technology Group, you can compare the effects of market volatilities on Shanghai V and NAURA Technology 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 Shanghai V with a short position of NAURA Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shanghai V and NAURA Technology.

Diversification Opportunities for Shanghai V and NAURA Technology

0.91

Correlation Coefficient

Shanghai V  NAURA Technology

Almost no diversification

The 3 months correlation between Shanghai and NAURA is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Shanghai V Test Semiconductor and NAURA Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAURA Technology and Shanghai V 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 Shanghai V Test Semiconductor are associated (or correlated) with NAURA Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAURA Technology has no effect on the direction of Shanghai V i.e., Shanghai V and NAURA Technology go up and down completely randomly.

Pair Corralation between Shanghai V and NAURA Technology

Assuming the 90 days trading horizon Shanghai V is expected to generate 11.78 times less return on investment than NAURA Technology. In addition to that, Shanghai V is 1.72 times more volatile than NAURA Technology Group. It trades about 0.0 of its total potential returns per unit of risk. NAURA Technology Group is currently generating about 0.09 per unit of volatility. If you would invest  22,625  in NAURA Technology Group on October 6, 2024 and sell it today you would earn a total of  14,885  from holding NAURA Technology Group or generate 65.79% return on investment over 90 days.

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

Shanghai V Test Semiconductor  vs.  NAURA Technology Group

Shanghai V Test

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shanghai V Test Semiconductor has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

NAURA Technology

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Shanghai V and NAURA Technology

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

The idea behind Shanghai V Test Semiconductor and NAURA Technology 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.