Correlation Between CN MODERN and KINGBOARD CHEMICAL
Can any of the company-specific risk be diversified away by investing in both CN MODERN and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL, you can compare the effects of market volatilities on CN MODERN and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and KINGBOARD CHEMICAL.
Diversification Opportunities for CN MODERN and KINGBOARD CHEMICAL
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between 07M and KINGBOARD is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and KINGBOARD CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KINGBOARD CHEMICAL has no effect on the direction of CN MODERN i.e., CN MODERN and KINGBOARD CHEMICAL go up and down completely randomly.
Pair Corralation between CN MODERN and KINGBOARD CHEMICAL
Assuming the 90 days trading horizon CN MODERN is expected to generate 2.59 times less return on investment than KINGBOARD CHEMICAL. But when comparing it to its historical volatility, CN MODERN DAIRY is 1.38 times less risky than KINGBOARD CHEMICAL. It trades about 0.03 of its potential returns per unit of risk. KINGBOARD CHEMICAL is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 116.00 in KINGBOARD CHEMICAL on September 25, 2024 and sell it today you would earn a total of 108.00 from holding KINGBOARD CHEMICAL or generate 93.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. KINGBOARD CHEMICAL
Performance |
| Timeline |
| CN MODERN DAIRY |
| KINGBOARD CHEMICAL |
CN MODERN and KINGBOARD CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and KINGBOARD CHEMICAL
The main advantage of trading using opposite CN MODERN and KINGBOARD CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL will offset losses from the drop in KINGBOARD CHEMICAL's long position.The idea behind CN MODERN DAIRY and KINGBOARD CHEMICAL 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.| KINGBOARD CHEMICAL vs. Tradegate AG Wertpapierhandelsbank | KINGBOARD CHEMICAL vs. ETFS Coffee ETC | KINGBOARD CHEMICAL vs. ALIOR BANK | KINGBOARD CHEMICAL vs. Luckin Coffee |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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