Correlation Between Nasdaq and Hunan Tyen

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Can any of the company-specific risk be diversified away by investing in both Nasdaq and Hunan Tyen 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 Hunan Tyen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Hunan Tyen Machinery, you can compare the effects of market volatilities on Nasdaq and Hunan Tyen 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 Hunan Tyen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Hunan Tyen.

Diversification Opportunities for Nasdaq and Hunan Tyen

0.59
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Nasdaq and Hunan is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Hunan Tyen Machinery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Tyen Machinery 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 Hunan Tyen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Tyen Machinery has no effect on the direction of Nasdaq i.e., Nasdaq and Hunan Tyen go up and down completely randomly.

Pair Corralation between Nasdaq and Hunan Tyen

Given the investment horizon of 90 days Nasdaq is expected to generate 6.83 times less return on investment than Hunan Tyen. But when comparing it to its historical volatility, Nasdaq Inc is 3.77 times less risky than Hunan Tyen. It trades about 0.07 of its potential returns per unit of risk. Hunan Tyen Machinery is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  429.00  in Hunan Tyen Machinery on September 19, 2024 and sell it today you would earn a total of  127.00  from holding Hunan Tyen Machinery or generate 29.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy92.19%
ValuesDaily Returns

Nasdaq Inc  vs.  Hunan Tyen Machinery

 Performance 
       Timeline  
Nasdaq Inc 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Hunan Tyen Machinery 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Hunan Tyen Machinery are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hunan Tyen sustained solid returns over the last few months and may actually be approaching a breakup point.

Nasdaq and Hunan Tyen Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nasdaq and Hunan Tyen

The main advantage of trading using opposite Nasdaq and Hunan Tyen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Hunan Tyen 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 Hunan Tyen will offset losses from the drop in Hunan Tyen's long position.
The idea behind Nasdaq Inc and Hunan Tyen Machinery 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.

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