Correlation Between NMI Holdings and China DatangRenewable
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and China DatangRenewable 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 DatangRenewable 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 Datang, you can compare the effects of market volatilities on NMI Holdings and China DatangRenewable 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 DatangRenewable. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and China DatangRenewable.
Diversification Opportunities for NMI Holdings and China DatangRenewable
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NMI and China is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and China Datang in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China DatangRenewable 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 DatangRenewable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China DatangRenewable has no effect on the direction of NMI Holdings i.e., NMI Holdings and China DatangRenewable go up and down completely randomly.
Pair Corralation between NMI Holdings and China DatangRenewable
Assuming the 90 days horizon NMI Holdings is expected to under-perform the China DatangRenewable. But the stock apears to be less risky and, when comparing its historical volatility, NMI Holdings is 1.54 times less risky than China DatangRenewable. The stock trades about -0.14 of its potential returns per unit of risk. The China Datang is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 24.00 in China Datang on October 11, 2024 and sell it today you would earn a total of 0.00 from holding China Datang or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. China Datang
Performance |
| Timeline |
| NMI Holdings |
| China DatangRenewable |
NMI Holdings and China DatangRenewable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and China DatangRenewable
The main advantage of trading using opposite NMI Holdings and China DatangRenewable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, China DatangRenewable 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 DatangRenewable will offset losses from the drop in China DatangRenewable's long position.| NMI Holdings vs. STMicroelectronics NV | NMI Holdings vs. Shenzhen Investment Limited | NMI Holdings vs. ECHO INVESTMENT ZY | NMI Holdings vs. ARROW ELECTRONICS |
| China DatangRenewable vs. Planet Fitness | China DatangRenewable vs. US Physical Therapy | China DatangRenewable vs. CLOVER HEALTH INV | China DatangRenewable 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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