Correlation Between Nanjing Vishee and Piotech

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

Diversification Opportunities for Nanjing Vishee and Piotech

0.69
  Correlation Coefficient

Poor diversification

The 3 months correlation between Nanjing and Piotech is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Nanjing Vishee Medical and Piotech Inc A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Piotech Inc A and Nanjing Vishee 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 Vishee Medical are associated (or correlated) with Piotech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Piotech Inc A has no effect on the direction of Nanjing Vishee i.e., Nanjing Vishee and Piotech go up and down completely randomly.

Pair Corralation between Nanjing Vishee and Piotech

Assuming the 90 days trading horizon Nanjing Vishee Medical is expected to generate 0.86 times more return on investment than Piotech. However, Nanjing Vishee Medical is 1.17 times less risky than Piotech. It trades about -0.01 of its potential returns per unit of risk. Piotech Inc A is currently generating about -0.02 per unit of risk. If you would invest  2,817  in Nanjing Vishee Medical on October 25, 2024 and sell it today you would lose (130.00) from holding Nanjing Vishee Medical or give up 4.61% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy98.44%
ValuesDaily Returns

Nanjing Vishee Medical  vs.  Piotech Inc A

 Performance 
       Timeline  
Nanjing Vishee Medical 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Nanjing Vishee Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nanjing Vishee is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Piotech Inc A 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Piotech Inc A has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Piotech is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Nanjing Vishee and Piotech Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nanjing Vishee and Piotech

The main advantage of trading using opposite Nanjing Vishee and Piotech positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nanjing Vishee position performs unexpectedly, Piotech 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 Piotech will offset losses from the drop in Piotech's long position.
The idea behind Nanjing Vishee Medical and Piotech Inc A 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.

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