Correlation Between National Storage and ReTo Eco

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

By analyzing existing cross correlation between National Storage REIT and ReTo Eco Solutions, you can compare the effects of market volatilities on National Storage and ReTo Eco 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 National Storage with a short position of ReTo Eco. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and ReTo Eco.

Diversification Opportunities for National Storage and ReTo Eco

0.52

Correlation Coefficient

National Storage  ReTo Eco

Very weak diversification

The 3 months correlation between National and ReTo is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding National Storage REIT and ReTo Eco Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ReTo Eco Solutions and National Storage 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 National Storage REIT are associated (or correlated) with ReTo Eco. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ReTo Eco Solutions has no effect on the direction of National Storage i.e., National Storage and ReTo Eco go up and down completely randomly.

Pair Corralation between National Storage and ReTo Eco

Assuming the 90 days horizon National Storage REIT is expected to under-perform the ReTo Eco. But the pink sheet apears to be less risky and, when comparing its historical volatility, National Storage REIT is 12.1 times less risky than ReTo Eco. The pink sheet trades about -0.09 of its potential returns per unit of risk. The ReTo Eco Solutions is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  910.00  in ReTo Eco Solutions on December 21, 2024 and sell it today you would lose (410.00) from holding ReTo Eco Solutions or give up 45.05% of portfolio value over 90 days.

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

National Storage REIT  vs.  ReTo Eco Solutions

National Storage REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Storage REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ReTo Eco Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days ReTo Eco Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, ReTo Eco is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with National Storage and ReTo Eco

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

The idea behind National Storage REIT and ReTo Eco Solutions 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.