Correlation Between CDN IMPERIAL and Nine Dragons
Can any of the company-specific risk be diversified away by investing in both CDN IMPERIAL and Nine Dragons 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 CDN IMPERIAL and Nine Dragons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CDN IMPERIAL BANK and Nine Dragons Paper, you can compare the effects of market volatilities on CDN IMPERIAL and Nine Dragons 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 CDN IMPERIAL with a short position of Nine Dragons. Check out your portfolio center. Please also check ongoing floating volatility patterns of CDN IMPERIAL and Nine Dragons.
Diversification Opportunities for CDN IMPERIAL and Nine Dragons
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CDN and Nine is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CDN IMPERIAL BANK and Nine Dragons Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Dragons Paper and CDN IMPERIAL 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 CDN IMPERIAL BANK are associated (or correlated) with Nine Dragons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Dragons Paper has no effect on the direction of CDN IMPERIAL i.e., CDN IMPERIAL and Nine Dragons go up and down completely randomly.
Pair Corralation between CDN IMPERIAL and Nine Dragons
Assuming the 90 days trading horizon CDN IMPERIAL BANK is expected to generate 0.34 times more return on investment than Nine Dragons. However, CDN IMPERIAL BANK is 2.95 times less risky than Nine Dragons. It trades about 0.28 of its potential returns per unit of risk. Nine Dragons Paper is currently generating about -0.04 per unit of risk. If you would invest 5,800 in CDN IMPERIAL BANK on September 4, 2024 and sell it today you would earn a total of 309.00 from holding CDN IMPERIAL BANK or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CDN IMPERIAL BANK vs. Nine Dragons Paper
Performance |
| Timeline |
| CDN IMPERIAL BANK |
| Nine Dragons Paper |
CDN IMPERIAL and Nine Dragons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CDN IMPERIAL and Nine Dragons
The main advantage of trading using opposite CDN IMPERIAL and Nine Dragons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CDN IMPERIAL position performs unexpectedly, Nine Dragons 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 Nine Dragons will offset losses from the drop in Nine Dragons' long position.| CDN IMPERIAL vs. TOTAL GABON | CDN IMPERIAL vs. Walgreens Boots Alliance | CDN IMPERIAL vs. Peak Resources Limited |
| Nine Dragons vs. AUSTEVOLL SEAFOOD | Nine Dragons vs. Insteel Industries | Nine Dragons vs. MITSUBISHI STEEL MFG | Nine Dragons vs. JJ SNACK FOODS |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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