Correlation Between Chengdu PUTIAN and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Chengdu PUTIAN and NMI Holdings 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 Chengdu PUTIAN and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Chengdu PUTIAN Telecommunications and NMI Holdings, you can compare the effects of market volatilities on Chengdu PUTIAN and NMI Holdings 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 Chengdu PUTIAN with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu PUTIAN and NMI Holdings.
Diversification Opportunities for Chengdu PUTIAN and NMI Holdings
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Chengdu and NMI is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu PUTIAN Telecommunicati and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Chengdu 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 Chengdu PUTIAN Telecommunications are associated (or correlated) with NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of Chengdu PUTIAN i.e., Chengdu PUTIAN and NMI Holdings go up and down completely randomly.
Pair Corralation between Chengdu PUTIAN and NMI Holdings
Assuming the 90 days trading horizon Chengdu PUTIAN Telecommunications is expected to generate 4.61 times more return on investment than NMI Holdings. However, Chengdu PUTIAN is 4.61 times more volatile than NMI Holdings. It trades about 0.02 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.07 per unit of risk. If you would invest 10.00 in Chengdu PUTIAN Telecommunications on October 12, 2024 and sell it today you would lose (2.65) from holding Chengdu PUTIAN Telecommunications or give up 26.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu PUTIAN Telecommunicati vs. NMI Holdings
Performance |
| Timeline |
| Chengdu PUTIAN Telec |
| NMI Holdings |
Chengdu PUTIAN and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu PUTIAN and NMI Holdings
The main advantage of trading using opposite Chengdu PUTIAN and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu PUTIAN position performs unexpectedly, NMI Holdings 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 NMI Holdings will offset losses from the drop in NMI Holdings' long position.| Chengdu PUTIAN vs. ZTE Corporation | Chengdu PUTIAN vs. Superior Plus Corp | Chengdu PUTIAN vs. NMI Holdings | Chengdu PUTIAN vs. SIVERS SEMICONDUCTORS AB |
| NMI Holdings vs. ZhongAn Online P | NMI Holdings vs. Singapore Airlines Limited | NMI Holdings vs. PRECISION DRILLING P | NMI Holdings vs. CARSALESCOM |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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