Correlation Between National Beverage and China Petroleum
Can any of the company-specific risk be diversified away by investing in both National Beverage and China Petroleum 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 Petroleum 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 Petroleum Chemical, you can compare the effects of market volatilities on National Beverage and China Petroleum 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 Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and China Petroleum.
Diversification Opportunities for National Beverage and China Petroleum
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and China is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and China Petroleum Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Petroleum Chemical 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 Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Petroleum Chemical has no effect on the direction of National Beverage i.e., National Beverage and China Petroleum go up and down completely randomly.
Pair Corralation between National Beverage and China Petroleum
Assuming the 90 days horizon National Beverage Corp is expected to under-perform the China Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, National Beverage Corp is 1.04 times less risky than China Petroleum. The stock trades about -0.07 of its potential returns per unit of risk. The China Petroleum Chemical is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 51.00 in China Petroleum Chemical on September 14, 2024 and sell it today you would earn a total of 2.00 from holding China Petroleum Chemical or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. China Petroleum Chemical
Performance |
| Timeline |
| National Beverage Corp |
| China Petroleum Chemical |
National Beverage and China Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and China Petroleum
The main advantage of trading using opposite National Beverage and China Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, China Petroleum 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 Petroleum will offset losses from the drop in China Petroleum's long position.| National Beverage vs. Superior Plus Corp | National Beverage vs. SIVERS SEMICONDUCTORS AB | National Beverage vs. NorAm Drilling AS | National Beverage vs. Norsk Hydro ASA |
| China Petroleum vs. HYATT HOTELS A | China Petroleum vs. Charoen Pokphand Foods | China Petroleum vs. InterContinental Hotels Group | China Petroleum vs. National Beverage Corp |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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