Correlation Between CN MODERN and OAKTRSPECLENDNEW
Can any of the company-specific risk be diversified away by investing in both CN MODERN and OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW, you can compare the effects of market volatilities on CN MODERN and OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and OAKTRSPECLENDNEW.
Diversification Opportunities for CN MODERN and OAKTRSPECLENDNEW
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between 07M and OAKTRSPECLENDNEW is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and OAKTRSPECLENDNEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OAKTRSPECLENDNEW has no effect on the direction of CN MODERN i.e., CN MODERN and OAKTRSPECLENDNEW go up and down completely randomly.
Pair Corralation between CN MODERN and OAKTRSPECLENDNEW
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to under-perform the OAKTRSPECLENDNEW. But the stock apears to be less risky and, when comparing its historical volatility, CN MODERN DAIRY is 1.05 times less risky than OAKTRSPECLENDNEW. The stock trades about -0.19 of its potential returns per unit of risk. The OAKTRSPECLENDNEW is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 1,483 in OAKTRSPECLENDNEW on August 29, 2024 and sell it today you would lose (15.00) from holding OAKTRSPECLENDNEW or give up 1.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. OAKTRSPECLENDNEW
Performance |
| Timeline |
| CN MODERN DAIRY |
| OAKTRSPECLENDNEW |
CN MODERN and OAKTRSPECLENDNEW Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and OAKTRSPECLENDNEW
The main advantage of trading using opposite CN MODERN and OAKTRSPECLENDNEW positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, OAKTRSPECLENDNEW 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 OAKTRSPECLENDNEW will offset losses from the drop in OAKTRSPECLENDNEW's long position.The idea behind CN MODERN DAIRY and OAKTRSPECLENDNEW 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.| OAKTRSPECLENDNEW vs. Apple Inc | OAKTRSPECLENDNEW vs. Apple Inc | OAKTRSPECLENDNEW vs. Apple Inc | OAKTRSPECLENDNEW vs. Apple Inc |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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