Correlation Between The9 and Nasdaq
Can any of the company-specific risk be diversified away by investing in both The9 and Nasdaq 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 The9 and Nasdaq into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The9 Ltd ADR and Nasdaq Inc, you can compare the effects of market volatilities on The9 and Nasdaq 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 The9 with a short position of Nasdaq. Check out your portfolio center. Please also check ongoing floating volatility patterns of The9 and Nasdaq.
Diversification Opportunities for The9 and Nasdaq
Very poor diversification
The 3 months correlation between The9 and Nasdaq is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding The9 Ltd ADR and Nasdaq Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq Inc and The9 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 The9 Ltd ADR are associated (or correlated) with Nasdaq. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq Inc has no effect on the direction of The9 i.e., The9 and Nasdaq go up and down completely randomly.
Pair Corralation between The9 and Nasdaq
Given the investment horizon of 90 days The9 Ltd ADR is expected to generate 4.94 times more return on investment than Nasdaq. However, The9 is 4.94 times more volatile than Nasdaq Inc. It trades about 0.05 of its potential returns per unit of risk. Nasdaq Inc is currently generating about 0.05 per unit of risk. If you would invest 730.00 in The9 Ltd ADR on August 30, 2024 and sell it today you would earn a total of 602.00 from holding The9 Ltd ADR or generate 82.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
The9 Ltd ADR vs. Nasdaq Inc
Performance |
| Timeline |
| The9 Ltd ADR |
| Nasdaq Inc |
The9 and Nasdaq Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with The9 and Nasdaq
The main advantage of trading using opposite The9 and Nasdaq positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The9 position performs unexpectedly, Nasdaq 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 Nasdaq will offset losses from the drop in Nasdaq's long position.| The9 vs. Atari SA | The9 vs. Victory Square Technologies | The9 vs. Motorsport Gaming Us | The9 vs. Alpha Esports Tech |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Global Markets Map Get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |