Correlation Between National Beverage and China Communications
Can any of the company-specific risk be diversified away by investing in both National Beverage and China Communications 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 Communications 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 Communications Services, you can compare the effects of market volatilities on National Beverage and China Communications 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 Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and China Communications.
Diversification Opportunities for National Beverage and China Communications
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between National and China is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and China Communications Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications 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 Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of National Beverage i.e., National Beverage and China Communications go up and down completely randomly.
Pair Corralation between National Beverage and China Communications
Assuming the 90 days horizon National Beverage is expected to generate 12.38 times less return on investment than China Communications. But when comparing it to its historical volatility, National Beverage Corp is 4.27 times less risky than China Communications. It trades about 0.03 of its potential returns per unit of risk. China Communications Services is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 25.00 in China Communications Services on September 12, 2024 and sell it today you would earn a total of 26.00 from holding China Communications Services or generate 104.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. China Communications Services
Performance |
| Timeline |
| National Beverage Corp |
| China Communications |
National Beverage and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and China Communications
The main advantage of trading using opposite National Beverage and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage position performs unexpectedly, China Communications 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 Communications will offset losses from the drop in China Communications' 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 Communications vs. Superior Plus Corp | China Communications vs. SIVERS SEMICONDUCTORS AB | China Communications vs. Norsk Hydro ASA | China Communications vs. Reliance Steel Aluminum |
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.
Other Complementary Tools
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Stocks Directory Find actively traded stocks across global markets |