Correlation Between Nasdaq and Wankai New

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

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

Diversification Opportunities for Nasdaq and Wankai New

0.14

Correlation Coefficient

Nasdaq  Wankai New

Average diversification

The 3 months correlation between Nasdaq and Wankai is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Wankai New Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wankai New Materials and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Wankai New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wankai New Materials has no effect on the direction of Nasdaq i.e., Nasdaq and Wankai New go up and down completely randomly.

Pair Corralation between Nasdaq and Wankai New

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.62 times more return on investment than Wankai New. However, Nasdaq Inc is 1.62 times less risky than Wankai New. It trades about 0.1 of its potential returns per unit of risk. Wankai New Materials is currently generating about -0.06 per unit of risk. If you would invest  5,048  in Nasdaq Inc on October 12, 2024 and sell it today you would earn a total of  2,754  from holding Nasdaq Inc or generate 54.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.69%
Values	Daily Returns

Nasdaq Inc  vs.  Wankai New Materials

Nasdaq Inc

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady basic indicators, Nasdaq may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Wankai New Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Wankai New Materials 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.

Pair Trading with Nasdaq and Wankai New

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

The idea behind Nasdaq Inc and Wankai New Materials 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.