Correlation Between China Natural and Vow ASA
Can any of the company-specific risk be diversified away by investing in both China Natural and Vow ASA 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 Vow ASA 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 Vow ASA, you can compare the effects of market volatilities on China Natural and Vow ASA 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 Vow ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Natural and Vow ASA.
Diversification Opportunities for China Natural and Vow ASA
-0.4 | Correlation Coefficient |
Very good diversification
The 3 months correlation between China and Vow is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding China Natural Resources and Vow ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vow ASA 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 Vow ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vow ASA has no effect on the direction of China Natural i.e., China Natural and Vow ASA go up and down completely randomly.
Pair Corralation between China Natural and Vow ASA
Given the investment horizon of 90 days China Natural Resources is expected to generate 0.45 times more return on investment than Vow ASA. However, China Natural Resources is 2.21 times less risky than Vow ASA. It trades about -0.1 of its potential returns per unit of risk. Vow ASA is currently generating about -0.21 per unit of risk. If you would invest 66.00 in China Natural Resources on August 30, 2024 and sell it today you would lose (5.00) from holding China Natural Resources or give up 7.58% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Natural Resources vs. Vow ASA
Performance |
| Timeline |
| China Natural Resources |
| Vow ASA |
China Natural and Vow ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Natural and Vow ASA
The main advantage of trading using opposite China Natural and Vow ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Natural position performs unexpectedly, Vow ASA 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 Vow ASA will offset losses from the drop in Vow ASA's long position.| China Natural vs. Seychelle Environmtl | China Natural vs. Vow ASA | China Natural vs. Eestech | China Natural vs. Energy and Water |
| Vow ASA vs. Eestech | Vow ASA vs. Energy and Water | Vow ASA vs. One World Universe | Vow ASA vs. Bion Environmental Technologies |
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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