Correlation Between Vanfund Urban and Nanjing Putian

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Can any of the company-specific risk be diversified away by investing in both Vanfund Urban 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 Vanfund Urban and Nanjing Putian into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanfund Urban Investment and Nanjing Putian Telecommunications, you can compare the effects of market volatilities on Vanfund Urban 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 Vanfund Urban with a short position of Nanjing Putian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanfund Urban and Nanjing Putian.

Diversification Opportunities for Vanfund Urban and Nanjing Putian

VanfundNanjingDiversified AwayVanfundNanjingDiversified Away100%
0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Vanfund and Nanjing is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Vanfund Urban Investment 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 Vanfund Urban 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 Vanfund Urban Investment 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 Vanfund Urban i.e., Vanfund Urban and Nanjing Putian go up and down completely randomly.

Pair Corralation between Vanfund Urban and Nanjing Putian

Assuming the 90 days trading horizon Vanfund Urban Investment is expected to under-perform the Nanjing Putian. But the stock apears to be less risky and, when comparing its historical volatility, Vanfund Urban Investment is 1.0 times less risky than Nanjing Putian. The stock trades about 0.0 of its potential returns per unit of risk. The Nanjing Putian Telecommunications is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  340.00  in Nanjing Putian Telecommunications on November 22, 2024 and sell it today you would earn a total of  67.00  from holding Nanjing Putian Telecommunications or generate 19.71% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Vanfund Urban Investment  vs.  Nanjing Putian Telecommunicati

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -20-10010
JavaScript chart by amCharts 3.21.15000638 200468
       Timeline  
Vanfund Urban Investment 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Vanfund Urban Investment has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Vanfund Urban is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb4.555.56
Nanjing Putian Telec 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Nanjing Putian Telecommunications has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nanjing Putian is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3.544.55

Vanfund Urban and Nanjing Putian Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-4.98-3.73-2.48-1.23-0.02081.162.333.514.69 0.0250.0300.0350.040
JavaScript chart by amCharts 3.21.15000638 200468
       Returns  

Pair Trading with Vanfund Urban and Nanjing Putian

The main advantage of trading using opposite Vanfund Urban and Nanjing Putian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanfund Urban 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 Vanfund Urban Investment 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.
Check out your portfolio center.
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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