Correlation Between Makalot Industrial and Nan Liu

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

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

Diversification Opportunities for Makalot Industrial and Nan Liu

0.28

Correlation Coefficient

Makalot Industrial  Nan Liu

Modest diversification

The 3 months correlation between Makalot and Nan is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Makalot Industrial Co and Nan Liu Enterprise in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nan Liu Enterprise and Makalot Industrial 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 Makalot Industrial Co are associated (or correlated) with Nan Liu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nan Liu Enterprise has no effect on the direction of Makalot Industrial i.e., Makalot Industrial and Nan Liu go up and down completely randomly.

Pair Corralation between Makalot Industrial and Nan Liu

Assuming the 90 days trading horizon Makalot Industrial Co is expected to under-perform the Nan Liu. In addition to that, Makalot Industrial is 2.55 times more volatile than Nan Liu Enterprise. It trades about -0.13 of its total potential returns per unit of risk. Nan Liu Enterprise is currently generating about -0.01 per unit of volatility. If you would invest  7,010  in Nan Liu Enterprise on August 31, 2024 and sell it today you would lose (60.00) from holding Nan Liu Enterprise or give up 0.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Makalot Industrial Co  vs.  Nan Liu Enterprise

Makalot Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Makalot Industrial Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in December 2024. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Nan Liu Enterprise

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nan Liu Enterprise has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Nan Liu is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Makalot Industrial and Nan Liu

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

The idea behind Makalot Industrial Co and Nan Liu 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.