Correlation Between Walker Dunlop and Ningbo Fangzheng

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

By analyzing existing cross correlation between Walker Dunlop and Ningbo Fangzheng Automobile, you can compare the effects of market volatilities on Walker Dunlop and Ningbo Fangzheng 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 Walker Dunlop with a short position of Ningbo Fangzheng. Check out your portfolio center. Please also check ongoing floating volatility patterns of Walker Dunlop and Ningbo Fangzheng.

Diversification Opportunities for Walker Dunlop and Ningbo Fangzheng

-0.67

Correlation Coefficient

Walker Dunlop  Ningbo Fangzheng

Excellent diversification

The 3 months correlation between Walker and Ningbo is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Walker Dunlop and Ningbo Fangzheng Automobile in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ningbo Fangzheng Aut and Walker Dunlop 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 Walker Dunlop are associated (or correlated) with Ningbo Fangzheng. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ningbo Fangzheng Aut has no effect on the direction of Walker Dunlop i.e., Walker Dunlop and Ningbo Fangzheng go up and down completely randomly.

Pair Corralation between Walker Dunlop and Ningbo Fangzheng

Allowing for the 90-day total investment horizon Walker Dunlop is expected to under-perform the Ningbo Fangzheng. But the stock apears to be less risky and, when comparing its historical volatility, Walker Dunlop is 1.2 times less risky than Ningbo Fangzheng. The stock trades about -0.09 of its potential returns per unit of risk. The Ningbo Fangzheng Automobile is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,519  in Ningbo Fangzheng Automobile on December 29, 2024 and sell it today you would earn a total of  261.00  from holding Ningbo Fangzheng Automobile or generate 17.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	95.08%
Values	Daily Returns

Walker Dunlop  vs.  Ningbo Fangzheng Automobile

Walker Dunlop

Risk-Adjusted Performance

Very Weak

Over the last 90 days Walker Dunlop has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Ningbo Fangzheng Aut

Risk-Adjusted Performance

OK

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

Pair Trading with Walker Dunlop and Ningbo Fangzheng

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

The idea behind Walker Dunlop and Ningbo Fangzheng Automobile 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.