Correlation Between Yindu Kitchen and Nanjing Putian

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

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

Diversification Opportunities for Yindu Kitchen and Nanjing Putian

-0.17

Correlation Coefficient

Yindu Kitchen  Nanjing Putian

Good diversification

The 3 months correlation between Yindu and Nanjing is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Yindu Kitchen Equipment and Nanjing Putian Telecommunicati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Putian Telec and Yindu Kitchen 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 Yindu Kitchen Equipment are associated (or correlated) with Nanjing Putian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Putian Telec has no effect on the direction of Yindu Kitchen i.e., Yindu Kitchen and Nanjing Putian go up and down completely randomly.

Pair Corralation between Yindu Kitchen and Nanjing Putian

Assuming the 90 days trading horizon Yindu Kitchen Equipment is expected to under-perform the Nanjing Putian. But the stock apears to be less risky and, when comparing its historical volatility, Yindu Kitchen Equipment is 2.58 times less risky than Nanjing Putian. The stock trades about -0.02 of its potential returns per unit of risk. The Nanjing Putian Telecommunications is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  379.00  in Nanjing Putian Telecommunications on September 1, 2024 and sell it today you would earn a total of  81.00  from holding Nanjing Putian Telecommunications or generate 21.37% return on investment over 90 days.

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

Yindu Kitchen Equipment  vs.  Nanjing Putian Telecommunicati

Yindu Kitchen Equipment

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Yindu Kitchen Equipment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Yindu Kitchen is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nanjing Putian Telec

Risk-Adjusted Performance

30 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Nanjing Putian Telecommunications are ranked lower than 30 (%) 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.

Pair Trading with Yindu Kitchen and Nanjing Putian

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

The idea behind Yindu Kitchen Equipment and Nanjing Putian Telecommunications 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..