Correlation Between National Storage and Chuangs China
Can any of the company-specific risk be diversified away by investing in both National Storage and Chuangs China 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 Storage and Chuangs China into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Storage Affiliates and Chuangs China Investments, you can compare the effects of market volatilities on National Storage and Chuangs China 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 Storage with a short position of Chuangs China. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Chuangs China.
Diversification Opportunities for National Storage and Chuangs China
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between National and Chuangs is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and Chuangs China Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chuangs China Investments and National Storage 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 Storage Affiliates are associated (or correlated) with Chuangs China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chuangs China Investments has no effect on the direction of National Storage i.e., National Storage and Chuangs China go up and down completely randomly.
Pair Corralation between National Storage and Chuangs China
Assuming the 90 days horizon National Storage Affiliates is expected to generate 2.64 times more return on investment than Chuangs China. However, National Storage is 2.64 times more volatile than Chuangs China Investments. It trades about 0.11 of its potential returns per unit of risk. Chuangs China Investments is currently generating about 0.0 per unit of risk. If you would invest 3,457 in National Storage Affiliates on September 3, 2024 and sell it today you would earn a total of 813.00 from holding National Storage Affiliates or generate 23.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Storage Affiliates vs. Chuangs China Investments
Performance |
| Timeline |
| National Storage Aff |
| Chuangs China Investments |
National Storage and Chuangs China Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Storage and Chuangs China
The main advantage of trading using opposite National Storage and Chuangs China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Chuangs China 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 Chuangs China will offset losses from the drop in Chuangs China's long position.The idea behind National Storage Affiliates and Chuangs China Investments 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.
| Chuangs China vs. Treasury Wine Estates | Chuangs China vs. GigaMedia | Chuangs China vs. NAKED WINES PLC | Chuangs China vs. Tencent Music Entertainment |
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
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Global Correlations Find global opportunities by holding instruments from different markets |