Correlation Between China Natural and NewJersey Resources

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Can any of the company-specific risk be diversified away by investing in both China Natural and NewJersey Resources 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 Natural and NewJersey Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Natural Cmn and NewJersey Resources, you can compare the effects of market volatilities on China Natural and NewJersey Resources 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 Natural with a short position of NewJersey Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Natural and NewJersey Resources.

Diversification Opportunities for China Natural and NewJersey Resources

ChinaNewJerseyDiversified AwayChinaNewJerseyDiversified Away100%
0.0
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between China and NewJersey is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Natural Cmn and NewJersey Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NewJersey Resources and China Natural 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 Natural Cmn are associated (or correlated) with NewJersey Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NewJersey Resources has no effect on the direction of China Natural i.e., China Natural and NewJersey Resources go up and down completely randomly.

Pair Corralation between China Natural and NewJersey Resources

If you would invest  4,669  in NewJersey Resources on November 24, 2024 and sell it today you would earn a total of  21.00  from holding NewJersey Resources or generate 0.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

China Natural Cmn  vs.  NewJersey Resources

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -4-20246810
JavaScript chart by amCharts 3.21.15CHNGQ NJR
       Timeline  
China Natural Cmn 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days China Natural Cmn has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, China Natural is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.
NewJersey Resources 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days NewJersey Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest unfluctuating performance, the Stock's forward-looking indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb45464748495051

China Natural and NewJersey Resources Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15 0.050.100.150.20
JavaScript chart by amCharts 3.21.15CHNGQ NJR
       Returns  

Pair Trading with China Natural and NewJersey Resources

The main advantage of trading using opposite China Natural and NewJersey Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Natural position performs unexpectedly, NewJersey Resources 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 NewJersey Resources will offset losses from the drop in NewJersey Resources' long position.
The idea behind China Natural Cmn and NewJersey Resources pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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