Correlation Between Chia Her and Nien Made

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

By analyzing existing cross correlation between Chia Her Industrial and Nien Made Enterprise, you can compare the effects of market volatilities on Chia Her and Nien Made 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 Chia Her with a short position of Nien Made. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chia Her and Nien Made.

Diversification Opportunities for Chia Her and Nien Made

-0.81

Correlation Coefficient

Chia Her  Nien Made

Pay attention - limited upside

The 3 months correlation between Chia and Nien is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Chia Her Industrial and Nien Made Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nien Made Enterprise and Chia Her 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 Chia Her Industrial are associated (or correlated) with Nien Made. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nien Made Enterprise has no effect on the direction of Chia Her i.e., Chia Her and Nien Made go up and down completely randomly.

Pair Corralation between Chia Her and Nien Made

Assuming the 90 days trading horizon Chia Her Industrial is expected to generate 1.52 times more return on investment than Nien Made. However, Chia Her is 1.52 times more volatile than Nien Made Enterprise. It trades about 0.15 of its potential returns per unit of risk. Nien Made Enterprise is currently generating about -0.07 per unit of risk. If you would invest  1,885  in Chia Her Industrial on September 5, 2024 and sell it today you would earn a total of  650.00  from holding Chia Her Industrial or generate 34.48% return on investment over 90 days.

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

Chia Her Industrial  vs.  Nien Made Enterprise

Chia Her Industrial

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Chia Her Industrial are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Chia Her showed solid returns over the last few months and may actually be approaching a breakup point.

Nien Made Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nien Made Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Chia Her and Nien Made

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

The idea behind Chia Her Industrial and Nien Made Enterprise 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.