Correlation Between Nasdaq and Kirin Holdings

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

By analyzing existing cross correlation between Nasdaq Inc and Kirin Holdings, you can compare the effects of market volatilities on Nasdaq and Kirin Holdings 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 Kirin Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Kirin Holdings.

Diversification Opportunities for Nasdaq and Kirin Holdings

0.19

Correlation Coefficient

Nasdaq  Kirin Holdings

Average diversification

The 3 months correlation between Nasdaq and Kirin is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Kirin Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kirin Holdings 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 Kirin Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kirin Holdings has no effect on the direction of Nasdaq i.e., Nasdaq and Kirin Holdings go up and down completely randomly.

Pair Corralation between Nasdaq and Kirin Holdings

Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.86 times more return on investment than Kirin Holdings. However, Nasdaq Inc is 1.16 times less risky than Kirin Holdings. It trades about 0.03 of its potential returns per unit of risk. Kirin Holdings is currently generating about -0.03 per unit of risk. If you would invest  8,059  in Nasdaq Inc on December 4, 2024 and sell it today you would earn a total of  138.00  from holding Nasdaq Inc or generate 1.71% return on investment over 90 days.

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

Nasdaq Inc  vs.  Kirin Holdings

Nasdaq Inc

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 2 (%) 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.

Kirin Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Kirin Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Kirin Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Nasdaq and Kirin Holdings

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

The idea behind Nasdaq Inc and Kirin Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.