Correlation Between Nature and SH Energy
Can any of the company-specific risk be diversified away by investing in both Nature and SH Energy 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 Nature and SH Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nature and Environment and SH Energy Chemical, you can compare the effects of market volatilities on Nature and SH Energy 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 Nature with a short position of SH Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nature and SH Energy.
Diversification Opportunities for Nature and SH Energy
Modest diversification
The 3 months correlation between Nature and 002360 is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nature and Environment and SH Energy Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SH Energy Chemical and Nature 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 Nature and Environment are associated (or correlated) with SH Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SH Energy Chemical has no effect on the direction of Nature i.e., Nature and SH Energy go up and down completely randomly.
Pair Corralation between Nature and SH Energy
Assuming the 90 days trading horizon Nature and Environment is expected to generate 0.55 times more return on investment than SH Energy. However, Nature and Environment is 1.82 times less risky than SH Energy. It trades about -0.22 of its potential returns per unit of risk. SH Energy Chemical is currently generating about -0.13 per unit of risk. If you would invest 61,400 in Nature and Environment on November 7, 2024 and sell it today you would lose (2,100) from holding Nature and Environment or give up 3.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 89.47% |
| Values | Daily Returns |
Nature and Environment vs. SH Energy Chemical
Performance |
| Timeline |
| Nature and Environment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| SH Energy Chemical |
Nature and SH Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nature and SH Energy
The main advantage of trading using opposite Nature and SH Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nature position performs unexpectedly, SH Energy 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 SH Energy will offset losses from the drop in SH Energy's long position.| Nature vs. FNC Entertainment Co | Nature vs. Barunson Entertainment Arts | Nature vs. LAKE MATERIALS LTD | Nature vs. JYP Entertainment Corp |
| SH Energy vs. Samsung Life Insurance | SH Energy vs. KG Eco Technology | SH Energy vs. Puloon Technology | SH Energy vs. Asia Technology Co |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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