Correlation Between Eastern Communications and Nanjing Putian
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By analyzing existing cross correlation between Eastern Communications Co and Nanjing Putian Telecommunications, you can compare the effects of market volatilities on Eastern Communications 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 Eastern Communications with a short position of Nanjing Putian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Communications and Nanjing Putian.
Diversification Opportunities for Eastern Communications and Nanjing Putian
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Eastern and Nanjing is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Communications Co 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 Eastern Communications 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 Eastern Communications Co 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 Eastern Communications i.e., Eastern Communications and Nanjing Putian go up and down completely randomly.
Pair Corralation between Eastern Communications and Nanjing Putian
Assuming the 90 days trading horizon Eastern Communications is expected to generate 3.76 times less return on investment than Nanjing Putian. But when comparing it to its historical volatility, Eastern Communications Co is 1.53 times less risky than Nanjing Putian. It trades about 0.15 of its potential returns per unit of risk. Nanjing Putian Telecommunications is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 188.00 in Nanjing Putian Telecommunications on August 25, 2024 and sell it today you would earn a total of 249.00 from holding Nanjing Putian Telecommunications or generate 132.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Communications Co vs. Nanjing Putian Telecommunicati
Performance |
| Timeline |
| Eastern Communications |
| Nanjing Putian Telec |
Eastern Communications and Nanjing Putian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Communications and Nanjing Putian
The main advantage of trading using opposite Eastern Communications and Nanjing Putian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Communications 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 Eastern Communications Co 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.
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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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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