Correlation Between China Natural and LiqTech International
Can any of the company-specific risk be diversified away by investing in both China Natural and LiqTech 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 Natural and LiqTech International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Natural Resources and LiqTech International, you can compare the effects of market volatilities on China Natural and LiqTech 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 Natural with a short position of LiqTech International. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Natural and LiqTech International.
Diversification Opportunities for China Natural and LiqTech International
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and LiqTech is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding China Natural Resources and LiqTech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LiqTech International 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 Resources are associated (or correlated) with LiqTech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LiqTech International has no effect on the direction of China Natural i.e., China Natural and LiqTech International go up and down completely randomly.
Pair Corralation between China Natural and LiqTech International
Given the investment horizon of 90 days China Natural Resources is expected to under-perform the LiqTech International. In addition to that, China Natural is 1.65 times more volatile than LiqTech International. It trades about -0.05 of its total potential returns per unit of risk. LiqTech International is currently generating about -0.04 per unit of volatility. If you would invest 184.00 in LiqTech International on November 3, 2024 and sell it today you would lose (9.00) from holding LiqTech International or give up 4.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Natural Resources vs. LiqTech International
Performance |
| Timeline |
| China Natural Resources |
| LiqTech International |
China Natural and LiqTech International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Natural and LiqTech International
The main advantage of trading using opposite China Natural and LiqTech International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Natural position performs unexpectedly, LiqTech 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 LiqTech International will offset losses from the drop in LiqTech International's long position.| China Natural vs. Seychelle Environmtl | China Natural vs. Vow ASA | China Natural vs. Eestech | China Natural vs. Energy and Water |
| LiqTech International vs. China Natural Resources | LiqTech International vs. Seychelle Environmtl | LiqTech International vs. Vow ASA | LiqTech International vs. Eestech |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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