Correlation Between DDC Enterprise and Natures Sunshine

Can any of the company-specific risk be diversified away by investing in both DDC Enterprise and Natures Sunshine 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 DDC Enterprise and Natures Sunshine into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between DDC Enterprise Limited and Natures Sunshine Products, you can compare the effects of market volatilities on DDC Enterprise and Natures Sunshine 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 DDC Enterprise with a short position of Natures Sunshine. Check out your portfolio center. Please also check ongoing floating volatility patterns of DDC Enterprise and Natures Sunshine.

Diversification Opportunities for DDC Enterprise and Natures Sunshine

-0.7

Correlation Coefficient

DDC Enterprise  Natures Sunshine

Excellent diversification

The 3 months correlation between DDC and Natures is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding DDC Enterprise Limited and Natures Sunshine Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natures Sunshine Products and DDC Enterprise 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 DDC Enterprise Limited are associated (or correlated) with Natures Sunshine. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natures Sunshine Products has no effect on the direction of DDC Enterprise i.e., DDC Enterprise and Natures Sunshine go up and down completely randomly.

Pair Corralation between DDC Enterprise and Natures Sunshine

Considering the 90-day investment horizon DDC Enterprise Limited is expected to under-perform the Natures Sunshine. In addition to that, DDC Enterprise is 4.91 times more volatile than Natures Sunshine Products. It trades about -0.03 of its total potential returns per unit of risk. Natures Sunshine Products is currently generating about 0.04 per unit of volatility. If you would invest  999.00  in Natures Sunshine Products on October 4, 2024 and sell it today you would earn a total of  457.00  from holding Natures Sunshine Products or generate 45.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	56.85%
Values	Daily Returns

DDC Enterprise Limited  vs.  Natures Sunshine Products

DDC Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DDC Enterprise Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Natures Sunshine Products

Risk-Adjusted Performance

4 of 100

Insignificant

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

Pair Trading with DDC Enterprise and Natures Sunshine

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

The idea behind DDC Enterprise Limited and Natures Sunshine Products 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.