Correlation Between China Galaxy and Neptune Digital
Can any of the company-specific risk be diversified away by investing in both China Galaxy and Neptune Digital 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 Galaxy and Neptune Digital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Galaxy Securities and Neptune Digital Assets, you can compare the effects of market volatilities on China Galaxy and Neptune Digital 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 Galaxy with a short position of Neptune Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Galaxy and Neptune Digital.
Diversification Opportunities for China Galaxy and Neptune Digital
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between China and Neptune is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding China Galaxy Securities and Neptune Digital Assets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neptune Digital Assets and China Galaxy 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 Galaxy Securities are associated (or correlated) with Neptune Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neptune Digital Assets has no effect on the direction of China Galaxy i.e., China Galaxy and Neptune Digital go up and down completely randomly.
Pair Corralation between China Galaxy and Neptune Digital
Assuming the 90 days horizon China Galaxy is expected to generate 20.55 times less return on investment than Neptune Digital. But when comparing it to its historical volatility, China Galaxy Securities is 5.29 times less risky than Neptune Digital. It trades about 0.02 of its potential returns per unit of risk. Neptune Digital Assets is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Neptune Digital Assets on August 24, 2024 and sell it today you would earn a total of 43.00 from holding Neptune Digital Assets or generate 330.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 82.26% |
| Values | Daily Returns |
China Galaxy Securities vs. Neptune Digital Assets
Performance |
| Timeline |
| China Galaxy Securities |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Neptune Digital Assets |
China Galaxy and Neptune Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Galaxy and Neptune Digital
The main advantage of trading using opposite China Galaxy and Neptune Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Galaxy position performs unexpectedly, Neptune Digital 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 Neptune Digital will offset losses from the drop in Neptune Digital's long position.| China Galaxy vs. Evercore Partners | China Galaxy vs. Lazard | China Galaxy vs. Moelis Co | China Galaxy vs. PJT Partners |
| Neptune Digital vs. Morgan Stanley | Neptune Digital vs. Goldman Sachs Group | Neptune Digital vs. Charles Schwab Corp | Neptune Digital vs. Interactive Brokers Group |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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