Correlation Between Chengdu PUTIAN and NESTE OYJ
Can any of the company-specific risk be diversified away by investing in both Chengdu PUTIAN and NESTE OYJ 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 NESTE OYJ 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 NESTE OYJ UNSPADR, you can compare the effects of market volatilities on Chengdu PUTIAN and NESTE OYJ 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 NESTE OYJ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Chengdu PUTIAN and NESTE OYJ.
Diversification Opportunities for Chengdu PUTIAN and NESTE OYJ
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Chengdu and NESTE is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Chengdu PUTIAN Telecommunicati and NESTE OYJ UNSPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NESTE OYJ UNSPADR 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 NESTE OYJ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NESTE OYJ UNSPADR has no effect on the direction of Chengdu PUTIAN i.e., Chengdu PUTIAN and NESTE OYJ go up and down completely randomly.
Pair Corralation between Chengdu PUTIAN and NESTE OYJ
Assuming the 90 days trading horizon Chengdu PUTIAN Telecommunications is expected to generate 1.59 times more return on investment than NESTE OYJ. However, Chengdu PUTIAN is 1.59 times more volatile than NESTE OYJ UNSPADR. It trades about 0.03 of its potential returns per unit of risk. NESTE OYJ UNSPADR is currently generating about -0.08 per unit of risk. If you would invest 7.65 in Chengdu PUTIAN Telecommunications on October 31, 2024 and sell it today you would earn a total of 0.10 from holding Chengdu PUTIAN Telecommunications or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Chengdu PUTIAN Telecommunicati vs. NESTE OYJ UNSPADR
Performance |
| Timeline |
| Chengdu PUTIAN Telec |
| NESTE OYJ UNSPADR |
Chengdu PUTIAN and NESTE OYJ Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Chengdu PUTIAN and NESTE OYJ
The main advantage of trading using opposite Chengdu PUTIAN and NESTE OYJ positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Chengdu PUTIAN position performs unexpectedly, NESTE OYJ 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 NESTE OYJ will offset losses from the drop in NESTE OYJ's long position.| Chengdu PUTIAN vs. PRECISION DRILLING P | Chengdu PUTIAN vs. ATOSS SOFTWARE | Chengdu PUTIAN vs. UPDATE SOFTWARE | Chengdu PUTIAN vs. BORR DRILLING NEW |
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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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