Correlation Between CNFinance Holdings and Denali Capital

Can any of the company-specific risk be diversified away by investing in both CNFinance Holdings and Denali Capital 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 CNFinance Holdings and Denali Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CNFinance Holdings and Denali Capital Acquisition, you can compare the effects of market volatilities on CNFinance Holdings and Denali Capital 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 CNFinance Holdings with a short position of Denali Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNFinance Holdings and Denali Capital.

Diversification Opportunities for CNFinance Holdings and Denali Capital

-0.68

Correlation Coefficient

CNFinance Holdings  Denali Capital

Excellent diversification

The 3 months correlation between CNFinance and Denali is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding CNFinance Holdings and Denali Capital Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Denali Capital Acqui and CNFinance Holdings 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 CNFinance Holdings are associated (or correlated) with Denali Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Denali Capital Acqui has no effect on the direction of CNFinance Holdings i.e., CNFinance Holdings and Denali Capital go up and down completely randomly.

Pair Corralation between CNFinance Holdings and Denali Capital

Considering the 90-day investment horizon CNFinance Holdings is expected to under-perform the Denali Capital. In addition to that, CNFinance Holdings is 1.17 times more volatile than Denali Capital Acquisition. It trades about -0.01 of its total potential returns per unit of risk. Denali Capital Acquisition is currently generating about 0.03 per unit of volatility. If you would invest  1,041  in Denali Capital Acquisition on October 5, 2024 and sell it today you would earn a total of  147.00  from holding Denali Capital Acquisition or generate 14.12% return on investment over 90 days.

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

CNFinance Holdings  vs.  Denali Capital Acquisition

CNFinance Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CNFinance Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Denali Capital Acqui

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Denali Capital Acquisition are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong fundamental indicators, Denali Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with CNFinance Holdings and Denali Capital

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

The idea behind CNFinance Holdings and Denali Capital Acquisition 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.