Correlation Between China Green and Yara International
Can any of the company-specific risk be diversified away by investing in both China Green and Yara International 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 Green and Yara International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Green Agriculture and Yara International ASA, you can compare the effects of market volatilities on China Green and Yara International 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 Green with a short position of Yara International. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Green and Yara International.
Diversification Opportunities for China Green and Yara International
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between China and Yara is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding China Green Agriculture and Yara International ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Yara International ASA and China Green 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 Green Agriculture are associated (or correlated) with Yara International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Yara International ASA has no effect on the direction of China Green i.e., China Green and Yara International go up and down completely randomly.
Pair Corralation between China Green and Yara International
Considering the 90-day investment horizon China Green Agriculture is expected to generate 2.81 times more return on investment than Yara International. However, China Green is 2.81 times more volatile than Yara International ASA. It trades about 0.02 of its potential returns per unit of risk. Yara International ASA is currently generating about -0.21 per unit of risk. If you would invest 198.00 in China Green Agriculture on August 30, 2024 and sell it today you would earn a total of 0.00 from holding China Green Agriculture or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
China Green Agriculture vs. Yara International ASA
Performance |
| Timeline |
| China Green Agriculture |
| Yara International ASA |
China Green and Yara International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Green and Yara International
The main advantage of trading using opposite China Green and Yara International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Green position performs unexpectedly, Yara International 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 Yara International will offset losses from the drop in Yara International's long position.| China Green vs. KS AG DRC | China Green vs. Intrepid Potash | China Green vs. Bioceres Crop Solutions | China Green vs. American Vanguard |
| Yara International vs. KS AG DRC | Yara International vs. ICL Israel Chemicals | Yara International vs. CF Industries Holdings | Yara International vs. The Mosaic |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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