Correlation Between Nanjing Putian and Hunan Airbluer

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

By analyzing existing cross correlation between Nanjing Putian Telecommunications and Hunan Airbluer Environmental, you can compare the effects of market volatilities on Nanjing Putian and Hunan Airbluer 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 Nanjing Putian with a short position of Hunan Airbluer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanjing Putian and Hunan Airbluer.

Diversification Opportunities for Nanjing Putian and Hunan Airbluer

0.93

Correlation Coefficient

Nanjing Putian  Hunan Airbluer

Almost no diversification

The 3 months correlation between Nanjing and Hunan is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Putian Telecommunicati and Hunan Airbluer Environmental in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hunan Airbluer Envir and Nanjing Putian 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 Nanjing Putian Telecommunications are associated (or correlated) with Hunan Airbluer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hunan Airbluer Envir has no effect on the direction of Nanjing Putian i.e., Nanjing Putian and Hunan Airbluer go up and down completely randomly.

Pair Corralation between Nanjing Putian and Hunan Airbluer

Assuming the 90 days trading horizon Nanjing Putian Telecommunications is expected to generate 1.01 times more return on investment than Hunan Airbluer. However, Nanjing Putian is 1.01 times more volatile than Hunan Airbluer Environmental. It trades about 0.32 of its potential returns per unit of risk. Hunan Airbluer Environmental is currently generating about 0.21 per unit of risk. If you would invest  195.00  in Nanjing Putian Telecommunications on September 12, 2024 and sell it today you would earn a total of  239.00  from holding Nanjing Putian Telecommunications or generate 122.56% return on investment over 90 days.

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

Nanjing Putian Telecommunicati  vs.  Hunan Airbluer Environmental

Nanjing Putian Telec

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Putian Telecommunications are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nanjing Putian sustained solid returns over the last few months and may actually be approaching a breakup point.

Hunan Airbluer Envir

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Hunan Airbluer Environmental are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Hunan Airbluer sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nanjing Putian and Hunan Airbluer

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

The idea behind Nanjing Putian Telecommunications and Hunan Airbluer Environmental 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.