Correlation Between CHINA EDUCATION and Norwegian Air
Can any of the company-specific risk be diversified away by investing in both CHINA EDUCATION and Norwegian Air 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 CHINA EDUCATION and Norwegian Air into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA EDUCATION GROUP and Norwegian Air Shuttle, you can compare the effects of market volatilities on CHINA EDUCATION and Norwegian Air 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 CHINA EDUCATION with a short position of Norwegian Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA EDUCATION and Norwegian Air.
Diversification Opportunities for CHINA EDUCATION and Norwegian Air
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CHINA and Norwegian is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding CHINA EDUCATION GROUP and Norwegian Air Shuttle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Norwegian Air Shuttle and CHINA EDUCATION 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 CHINA EDUCATION GROUP are associated (or correlated) with Norwegian Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Norwegian Air Shuttle has no effect on the direction of CHINA EDUCATION i.e., CHINA EDUCATION and Norwegian Air go up and down completely randomly.
Pair Corralation between CHINA EDUCATION and Norwegian Air
Assuming the 90 days horizon CHINA EDUCATION GROUP is expected to under-perform the Norwegian Air. In addition to that, CHINA EDUCATION is 1.58 times more volatile than Norwegian Air Shuttle. It trades about -0.24 of its total potential returns per unit of risk. Norwegian Air Shuttle is currently generating about 0.15 per unit of volatility. If you would invest 85.00 in Norwegian Air Shuttle on August 29, 2024 and sell it today you would earn a total of 8.00 from holding Norwegian Air Shuttle or generate 9.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA EDUCATION GROUP vs. Norwegian Air Shuttle
Performance |
| Timeline |
| CHINA EDUCATION GROUP |
| Norwegian Air Shuttle |
CHINA EDUCATION and Norwegian Air Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA EDUCATION and Norwegian Air
The main advantage of trading using opposite CHINA EDUCATION and Norwegian Air positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA EDUCATION position performs unexpectedly, Norwegian Air 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 Norwegian Air will offset losses from the drop in Norwegian Air's long position.| CHINA EDUCATION vs. Choice Hotels International | CHINA EDUCATION vs. Wyndham Hotels Resorts | CHINA EDUCATION vs. FIREWEED METALS P | CHINA EDUCATION vs. PARKEN Sport Entertainment |
| Norwegian Air vs. URBAN OUTFITTERS | Norwegian Air vs. Public Storage | Norwegian Air vs. Fidelity National Information | Norwegian Air vs. 24SEVENOFFICE GROUP AB |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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