Correlation Between Nanjing Putian and Loongson Technology
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By analyzing existing cross correlation between Nanjing Putian Telecommunications and Loongson Technology Corp, you can compare the effects of market volatilities on Nanjing Putian and Loongson Technology 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 Nanjing Putian with a short position of Loongson Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nanjing Putian and Loongson Technology.
Diversification Opportunities for Nanjing Putian and Loongson Technology
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nanjing and Loongson is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Putian Telecommunicati and Loongson Technology Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loongson Technology Corp and Nanjing Putian 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 Nanjing Putian Telecommunications are associated (or correlated) with Loongson Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loongson Technology Corp has no effect on the direction of Nanjing Putian i.e., Nanjing Putian and Loongson Technology go up and down completely randomly.
Pair Corralation between Nanjing Putian and Loongson Technology
Assuming the 90 days trading horizon Nanjing Putian Telecommunications is expected to generate 1.81 times more return on investment than Loongson Technology. However, Nanjing Putian is 1.81 times more volatile than Loongson Technology Corp. It trades about 0.06 of its potential returns per unit of risk. Loongson Technology Corp is currently generating about -0.31 per unit of risk. If you would invest 385.00 in Nanjing Putian Telecommunications on October 28, 2024 and sell it today you would earn a total of 13.00 from holding Nanjing Putian Telecommunications or generate 3.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nanjing Putian Telecommunicati vs. Loongson Technology Corp
Performance |
| Timeline |
| Nanjing Putian Telec |
| Loongson Technology Corp |
Nanjing Putian and Loongson Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nanjing Putian and Loongson Technology
The main advantage of trading using opposite Nanjing Putian and Loongson Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanjing Putian position performs unexpectedly, Loongson Technology 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 Loongson Technology will offset losses from the drop in Loongson Technology's long position.| Nanjing Putian vs. Bus Online Co | Nanjing Putian vs. Holitech Technology Co | Nanjing Putian vs. Gome Telecom Equipment | Nanjing Putian vs. Cultural Investment Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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