Correlation Between Nanya New and Juneyao Airlines

Can any of the company-specific risk be diversified away by investing in both Nanya New and Juneyao Airlines 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 Nanya New and Juneyao Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nanya New Material and Juneyao Airlines, you can compare the effects of market volatilities on Nanya New and Juneyao Airlines 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 Nanya New with a short position of Juneyao Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanya New and Juneyao Airlines.

Diversification Opportunities for Nanya New and Juneyao Airlines

-0.28

Correlation Coefficient

Nanya New  Juneyao Airlines

Very good diversification

The 3 months correlation between Nanya and Juneyao is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nanya New Material and Juneyao Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Juneyao Airlines and Nanya New 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 Nanya New Material are associated (or correlated) with Juneyao Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Juneyao Airlines has no effect on the direction of Nanya New i.e., Nanya New and Juneyao Airlines go up and down completely randomly.

Pair Corralation between Nanya New and Juneyao Airlines

Assuming the 90 days trading horizon Nanya New Material is expected to generate 2.12 times more return on investment than Juneyao Airlines. However, Nanya New is 2.12 times more volatile than Juneyao Airlines. It trades about 0.19 of its potential returns per unit of risk. Juneyao Airlines is currently generating about -0.17 per unit of risk. If you would invest  2,024  in Nanya New Material on October 22, 2024 and sell it today you would earn a total of  273.00  from holding Nanya New Material or generate 13.49% return on investment over 90 days.

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

Nanya New Material  vs.  Juneyao Airlines

Nanya New Material

Risk-Adjusted Performance

0 of 100

Very Weak

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

Juneyao Airlines

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Juneyao Airlines are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Juneyao Airlines may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nanya New and Juneyao Airlines

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

The idea behind Nanya New Material and Juneyao Airlines 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.