Correlation Between Nisun International and Dunxin Financial

Can any of the company-specific risk be diversified away by investing in both Nisun International and Dunxin Financial 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 Nisun International and Dunxin Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nisun International Enterprise and Dunxin Financial Holdings, you can compare the effects of market volatilities on Nisun International and Dunxin Financial 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 Nisun International with a short position of Dunxin Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nisun International and Dunxin Financial.

Diversification Opportunities for Nisun International and Dunxin Financial

-0.8

Correlation Coefficient

Nisun International  Dunxin Financial

Pay attention - limited upside

The 3 months correlation between Nisun and Dunxin is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nisun International Enterprise and Dunxin Financial Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dunxin Financial Holdings and Nisun International 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 Nisun International Enterprise are associated (or correlated) with Dunxin Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dunxin Financial Holdings has no effect on the direction of Nisun International i.e., Nisun International and Dunxin Financial go up and down completely randomly.

Pair Corralation between Nisun International and Dunxin Financial

Given the investment horizon of 90 days Nisun International Enterprise is expected to generate 1.38 times more return on investment than Dunxin Financial. However, Nisun International is 1.38 times more volatile than Dunxin Financial Holdings. It trades about 0.19 of its potential returns per unit of risk. Dunxin Financial Holdings is currently generating about -0.05 per unit of risk. If you would invest  585.00  in Nisun International Enterprise on February 4, 2024 and sell it today you would earn a total of  187.00  from holding Nisun International Enterprise or generate 31.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Nisun International Enterprise  vs.  Dunxin Financial Holdings

Nisun International

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nisun International Enterprise are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent basic indicators, Nisun International displayed solid returns over the last few months and may actually be approaching a breakup point.

Dunxin Financial Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dunxin Financial Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nisun International and Dunxin Financial

The main advantage of trading using opposite Nisun International and Dunxin Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nisun International position performs unexpectedly, Dunxin Financial 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 Dunxin Financial will offset losses from the drop in Dunxin Financial's long position.

The idea behind Nisun International Enterprise and Dunxin Financial Holdings 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.