Correlation Between National Research and So Young

Can any of the company-specific risk be diversified away by investing in both National Research and So Young 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 National Research and So Young into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Research Corp and So Young International, you can compare the effects of market volatilities on National Research and So Young 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 National Research with a short position of So Young. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Research and So Young.

Diversification Opportunities for National Research and So Young

-0.43

Correlation Coefficient

National Research  So Young

Very good diversification

The 3 months correlation between National and So Young is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding National Research Corp and So Young International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on So Young International and National Research 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 National Research Corp are associated (or correlated) with So Young. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of So Young International has no effect on the direction of National Research i.e., National Research and So Young go up and down completely randomly.

Pair Corralation between National Research and So Young

Considering the 90-day investment horizon National Research Corp is expected to under-perform the So Young. But the stock apears to be less risky and, when comparing its historical volatility, National Research Corp is 2.25 times less risky than So Young. The stock trades about -0.06 of its potential returns per unit of risk. The So Young International is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  86.00  in So Young International on September 1, 2024 and sell it today you would lose (3.00) from holding So Young International or give up 3.49% of portfolio value over 90 days.

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

National Research Corp  vs.  So Young International

National Research Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Research Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

So Young International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in So Young International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, So Young may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with National Research and So Young

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

The idea behind National Research Corp and So Young International 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.