Correlation Between Easyhome New and Nanjing Medlander

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

Diversification Opportunities for Easyhome New and Nanjing Medlander

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Easyhome and Nanjing is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Easyhome New Retail and Nanjing Medlander Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nanjing Medlander Medical and Easyhome New 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 Easyhome New Retail are associated (or correlated) with Nanjing Medlander. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nanjing Medlander Medical has no effect on the direction of Easyhome New i.e., Easyhome New and Nanjing Medlander go up and down completely randomly.

Pair Corralation between Easyhome New and Nanjing Medlander

Assuming the 90 days trading horizon Easyhome New Retail is expected to generate 1.96 times more return on investment than Nanjing Medlander. However, Easyhome New is 1.96 times more volatile than Nanjing Medlander Medical. It trades about 0.32 of its potential returns per unit of risk. Nanjing Medlander Medical is currently generating about -0.04 per unit of risk. If you would invest  298.00  in Easyhome New Retail on September 13, 2024 and sell it today you would earn a total of  94.00  from holding Easyhome New Retail or generate 31.54% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Easyhome New Retail  vs.  Nanjing Medlander Medical

 Performance 
       Timeline  
Easyhome New Retail 

Risk-Adjusted Performance

22 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Easyhome New Retail are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Easyhome New sustained solid returns over the last few months and may actually be approaching a breakup point.
Nanjing Medlander Medical 

Risk-Adjusted Performance

11 of 100

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

Easyhome New and Nanjing Medlander Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Easyhome New and Nanjing Medlander

The main advantage of trading using opposite Easyhome New and Nanjing Medlander positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Easyhome New position performs unexpectedly, Nanjing Medlander 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 Medlander will offset losses from the drop in Nanjing Medlander's long position.
The idea behind Easyhome New Retail and Nanjing Medlander Medical 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.

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