Correlation Between Aluminumof China and Natural Health
Can any of the company-specific risk be diversified away by investing in both Aluminumof China and Natural Health 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 Aluminumof China and Natural Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aluminum of and Natural Health Trends, you can compare the effects of market volatilities on Aluminumof China and Natural Health 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 Aluminumof China with a short position of Natural Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aluminumof China and Natural Health.
Diversification Opportunities for Aluminumof China and Natural Health
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aluminumof and Natural is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Aluminum of and Natural Health Trends in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Health Trends and Aluminumof China 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 Aluminum of are associated (or correlated) with Natural Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Health Trends has no effect on the direction of Aluminumof China i.e., Aluminumof China and Natural Health go up and down completely randomly.
Pair Corralation between Aluminumof China and Natural Health
Assuming the 90 days horizon Aluminum of is expected to generate 1.47 times more return on investment than Natural Health. However, Aluminumof China is 1.47 times more volatile than Natural Health Trends. It trades about 0.09 of its potential returns per unit of risk. Natural Health Trends is currently generating about 0.01 per unit of risk. If you would invest 29.00 in Aluminum of on September 12, 2024 and sell it today you would earn a total of 28.00 from holding Aluminum of or generate 96.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aluminum of vs. Natural Health Trends
Performance |
| Timeline |
| Aluminumof China |
| Natural Health Trends |
Aluminumof China and Natural Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aluminumof China and Natural Health
The main advantage of trading using opposite Aluminumof China and Natural Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aluminumof China position performs unexpectedly, Natural Health 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 Natural Health will offset losses from the drop in Natural Health's long position.| Aluminumof China vs. Norsk Hydro ASA | Aluminumof China vs. Kaiser Aluminum | Aluminumof China vs. Superior Plus Corp | Aluminumof China vs. SIVERS SEMICONDUCTORS AB |
| Natural Health vs. Lendlease Group | Natural Health vs. FUYO GENERAL LEASE | Natural Health vs. Ares Management Corp | Natural Health vs. INVITATION HOMES DL |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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