Correlation Between China Resources and Nova Minerals
Can any of the company-specific risk be diversified away by investing in both China Resources and Nova Minerals 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 Resources and Nova Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Resources Beer and Nova Minerals Limited, you can compare the effects of market volatilities on China Resources and Nova Minerals 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 Resources with a short position of Nova Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Resources and Nova Minerals.
Diversification Opportunities for China Resources and Nova Minerals
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Nova is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding China Resources Beer and Nova Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nova Minerals Limited and China Resources 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 Resources Beer are associated (or correlated) with Nova Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nova Minerals Limited has no effect on the direction of China Resources i.e., China Resources and Nova Minerals go up and down completely randomly.
Pair Corralation between China Resources and Nova Minerals
Assuming the 90 days horizon China Resources Beer is expected to under-perform the Nova Minerals. But the stock apears to be less risky and, when comparing its historical volatility, China Resources Beer is 2.51 times less risky than Nova Minerals. The stock trades about -0.01 of its potential returns per unit of risk. The Nova Minerals Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 43.00 in Nova Minerals Limited on September 25, 2024 and sell it today you would lose (24.00) from holding Nova Minerals Limited or give up 55.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
China Resources Beer vs. Nova Minerals Limited
Performance |
| Timeline |
| China Resources Beer |
| Nova Minerals Limited |
China Resources and Nova Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Resources and Nova Minerals
The main advantage of trading using opposite China Resources and Nova Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Resources position performs unexpectedly, Nova Minerals 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 Nova Minerals will offset losses from the drop in Nova Minerals' long position.| China Resources vs. Fomento Econmico Mexicano | China Resources vs. Anheuser Busch InBev SANV | China Resources vs. Anheuser Busch InBev SANV | China Resources vs. BUDWEISER BREWUNSPADR4 |
| Nova Minerals vs. UNITED RENTALS | Nova Minerals vs. Monster Beverage Corp | Nova Minerals vs. Fevertree Drinks PLC | Nova Minerals vs. THAI BEVERAGE |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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