Correlation Between CN MODERN and TechnipFMC PLC
Can any of the company-specific risk be diversified away by investing in both CN MODERN and TechnipFMC PLC 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 CN MODERN and TechnipFMC PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CN MODERN DAIRY and TechnipFMC PLC, you can compare the effects of market volatilities on CN MODERN and TechnipFMC PLC 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 CN MODERN with a short position of TechnipFMC PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and TechnipFMC PLC.
Diversification Opportunities for CN MODERN and TechnipFMC PLC
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 07M and TechnipFMC is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and TechnipFMC PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechnipFMC PLC and CN MODERN 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 CN MODERN DAIRY are associated (or correlated) with TechnipFMC PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechnipFMC PLC has no effect on the direction of CN MODERN i.e., CN MODERN and TechnipFMC PLC go up and down completely randomly.
Pair Corralation between CN MODERN and TechnipFMC PLC
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to under-perform the TechnipFMC PLC. But the stock apears to be less risky and, when comparing its historical volatility, CN MODERN DAIRY is 1.37 times less risky than TechnipFMC PLC. The stock trades about -0.01 of its potential returns per unit of risk. The TechnipFMC PLC is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest 2,410 in TechnipFMC PLC on September 3, 2024 and sell it today you would earn a total of 536.00 from holding TechnipFMC PLC or generate 22.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. TechnipFMC PLC
Performance |
| Timeline |
| CN MODERN DAIRY |
| TechnipFMC PLC |
CN MODERN and TechnipFMC PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and TechnipFMC PLC
The main advantage of trading using opposite CN MODERN and TechnipFMC PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, TechnipFMC PLC 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 TechnipFMC PLC will offset losses from the drop in TechnipFMC PLC's long position.The idea behind CN MODERN DAIRY and TechnipFMC PLC 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.| TechnipFMC PLC vs. Halliburton | TechnipFMC PLC vs. Superior Plus Corp | TechnipFMC PLC vs. NMI Holdings | TechnipFMC PLC vs. Origin Agritech |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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