Correlation Between Niutech Environment and Guosheng Financial

Can any of the company-specific risk be diversified away by investing in both Niutech Environment and Guosheng Financial 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 Niutech Environment and Guosheng Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Niutech Environment Technology and Guosheng Financial Holding, you can compare the effects of market volatilities on Niutech Environment and Guosheng Financial 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 Niutech Environment with a short position of Guosheng Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Niutech Environment and Guosheng Financial.

Diversification Opportunities for Niutech Environment and Guosheng Financial

0.9

Correlation Coefficient

Niutech Environment  Guosheng Financial

Almost no diversification

The 3 months correlation between Niutech and Guosheng is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Niutech Environment Technology and Guosheng Financial Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guosheng Financial and Niutech Environment 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 Niutech Environment Technology are associated (or correlated) with Guosheng Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guosheng Financial has no effect on the direction of Niutech Environment i.e., Niutech Environment and Guosheng Financial go up and down completely randomly.

Pair Corralation between Niutech Environment and Guosheng Financial

Assuming the 90 days trading horizon Niutech Environment is expected to generate 1.27 times less return on investment than Guosheng Financial. But when comparing it to its historical volatility, Niutech Environment Technology is 1.1 times less risky than Guosheng Financial. It trades about 0.14 of its potential returns per unit of risk. Guosheng Financial Holding is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  910.00  in Guosheng Financial Holding on September 5, 2024 and sell it today you would earn a total of  380.00  from holding Guosheng Financial Holding or generate 41.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.28%
Values	Daily Returns

Niutech Environment Technology  vs.  Guosheng Financial Holding

Niutech Environment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Niutech Environment Technology are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Niutech Environment sustained solid returns over the last few months and may actually be approaching a breakup point.

Guosheng Financial

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Guosheng Financial Holding are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Guosheng Financial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Niutech Environment and Guosheng Financial

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

The idea behind Niutech Environment Technology and Guosheng Financial Holding 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.