Correlation Between CN MODERN and NEXANS
Can any of the company-specific risk be diversified away by investing in both CN MODERN and NEXANS 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 NEXANS 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 NEXANS, you can compare the effects of market volatilities on CN MODERN and NEXANS 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 NEXANS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and NEXANS.
Diversification Opportunities for CN MODERN and NEXANS
Good diversification
The 3 months correlation between 07M and NEXANS is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and NEXANS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXANS 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 NEXANS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXANS has no effect on the direction of CN MODERN i.e., CN MODERN and NEXANS go up and down completely randomly.
Pair Corralation between CN MODERN and NEXANS
Assuming the 90 days trading horizon CN MODERN DAIRY is expected to generate 1.26 times more return on investment than NEXANS. However, CN MODERN is 1.26 times more volatile than NEXANS. It trades about 0.01 of its potential returns per unit of risk. NEXANS is currently generating about 0.01 per unit of risk. If you would invest 10.00 in CN MODERN DAIRY on October 28, 2024 and sell it today you would earn a total of 0.00 from holding CN MODERN DAIRY or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CN MODERN DAIRY vs. NEXANS
Performance |
| Timeline |
| CN MODERN DAIRY |
| NEXANS |
CN MODERN and NEXANS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CN MODERN and NEXANS
The main advantage of trading using opposite CN MODERN and NEXANS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN position performs unexpectedly, NEXANS 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 NEXANS will offset losses from the drop in NEXANS's long position.| CN MODERN vs. Cognizant Technology Solutions | CN MODERN vs. Waste Management | CN MODERN vs. Perdoceo Education | CN MODERN vs. PKSHA TECHNOLOGY 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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