Correlation Between CTCI Corp and Nankang Rubber

Can any of the company-specific risk be diversified away by investing in both CTCI Corp and Nankang Rubber 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 CTCI Corp and Nankang Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CTCI Corp and Nankang Rubber Tire, you can compare the effects of market volatilities on CTCI Corp and Nankang Rubber 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 CTCI Corp with a short position of Nankang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of CTCI Corp and Nankang Rubber.

Diversification Opportunities for CTCI Corp and Nankang Rubber

0.12

Correlation Coefficient

CTCI Corp  Nankang Rubber

Average diversification

The 3 months correlation between CTCI and Nankang is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding CTCI Corp and Nankang Rubber Tire in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nankang Rubber Tire and CTCI Corp 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 CTCI Corp are associated (or correlated) with Nankang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nankang Rubber Tire has no effect on the direction of CTCI Corp i.e., CTCI Corp and Nankang Rubber go up and down completely randomly.

Pair Corralation between CTCI Corp and Nankang Rubber

Assuming the 90 days trading horizon CTCI Corp is expected to under-perform the Nankang Rubber. But the stock apears to be less risky and, when comparing its historical volatility, CTCI Corp is 2.06 times less risky than Nankang Rubber. The stock trades about -0.26 of its potential returns per unit of risk. The Nankang Rubber Tire is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest  4,980  in Nankang Rubber Tire on October 9, 2024 and sell it today you would lose (460.00) from holding Nankang Rubber Tire or give up 9.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

CTCI Corp  vs.  Nankang Rubber Tire

CTCI Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CTCI Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Nankang Rubber Tire

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nankang Rubber Tire has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with CTCI Corp and Nankang Rubber

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

The idea behind CTCI Corp and Nankang Rubber Tire 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.