Correlation Between National Beverage and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both National Beverage and CHINA EDUCATION 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 National Beverage and CHINA EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and CHINA EDUCATION GROUP, you can compare the effects of market volatilities on National Beverage and CHINA EDUCATION 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 National Beverage with a short position of CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and CHINA EDUCATION.
Diversification Opportunities for National Beverage and CHINA EDUCATION
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between National and CHINA is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP and National Beverage 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 National Beverage Corp are associated (or correlated) with CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of National Beverage i.e., National Beverage and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between National Beverage and CHINA EDUCATION
Assuming the 90 days horizon National Beverage is expected to generate 6.27 times less return on investment than CHINA EDUCATION. But when comparing it to its historical volatility, National Beverage Corp is 2.58 times less risky than CHINA EDUCATION. It trades about 0.03 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 26.00 in CHINA EDUCATION GROUP on August 24, 2024 and sell it today you would earn a total of 21.00 from holding CHINA EDUCATION GROUP or generate 80.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| National Beverage Corp |
| CHINA EDUCATION GROUP |
National Beverage and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and CHINA EDUCATION
The main advantage of trading using opposite National Beverage and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, CHINA EDUCATION 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 CHINA EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| National Beverage vs. Coca Cola FEMSA SAB | National Beverage vs. COCA A HBC | National Beverage vs. Superior Plus Corp | National Beverage vs. NMI Holdings |
| CHINA EDUCATION vs. CENTURIA OFFICE REIT | CHINA EDUCATION vs. Tower One Wireless | CHINA EDUCATION vs. DFS Furniture PLC | CHINA EDUCATION vs. Beazer Homes USA |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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