Correlation Between NMI Holdings and China Railway
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and China Railway 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 NMI Holdings and China Railway into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and China Railway Construction, you can compare the effects of market volatilities on NMI Holdings and China Railway 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 NMI Holdings with a short position of China Railway. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and China Railway.
Diversification Opportunities for NMI Holdings and China Railway
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between NMI and China is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and China Railway Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Railway Constr and NMI Holdings 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 NMI Holdings are associated (or correlated) with China Railway. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Railway Constr has no effect on the direction of NMI Holdings i.e., NMI Holdings and China Railway go up and down completely randomly.
Pair Corralation between NMI Holdings and China Railway
Assuming the 90 days horizon NMI Holdings is expected to generate 0.51 times more return on investment than China Railway. However, NMI Holdings is 1.95 times less risky than China Railway. It trades about 0.11 of its potential returns per unit of risk. China Railway Construction is currently generating about 0.02 per unit of risk. If you would invest 3,060 in NMI Holdings on August 31, 2024 and sell it today you would earn a total of 720.00 from holding NMI Holdings or generate 23.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. China Railway Construction
Performance |
| Timeline |
| NMI Holdings |
| China Railway Constr |
NMI Holdings and China Railway Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and China Railway
The main advantage of trading using opposite NMI Holdings and China Railway positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, China Railway 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 Railway will offset losses from the drop in China Railway's long position.| NMI Holdings vs. Iridium Communications | NMI Holdings vs. BOS BETTER ONLINE | NMI Holdings vs. Verizon Communications | NMI Holdings vs. Singapore Telecommunications Limited |
| China Railway vs. CPU SOFTWAREHOUSE | China Railway vs. Magic Software Enterprises | China Railway vs. Japan Medical Dynamic | China Railway vs. Compugroup Medical SE |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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