Correlation Between China Communications and NTG Nordic
Can any of the company-specific risk be diversified away by investing in both China Communications and NTG Nordic 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 Communications and NTG Nordic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Communications Services and NTG Nordic Transport, you can compare the effects of market volatilities on China Communications and NTG Nordic 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 Communications with a short position of NTG Nordic. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Communications and NTG Nordic.
Diversification Opportunities for China Communications and NTG Nordic
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and NTG is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding China Communications Services and NTG Nordic Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NTG Nordic Transport and China Communications 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 Communications Services are associated (or correlated) with NTG Nordic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NTG Nordic Transport has no effect on the direction of China Communications i.e., China Communications and NTG Nordic go up and down completely randomly.
Pair Corralation between China Communications and NTG Nordic
Assuming the 90 days horizon China Communications Services is expected to generate 1.44 times more return on investment than NTG Nordic. However, China Communications is 1.44 times more volatile than NTG Nordic Transport. It trades about 0.16 of its potential returns per unit of risk. NTG Nordic Transport is currently generating about -0.37 per unit of risk. If you would invest 51.00 in China Communications Services on October 9, 2024 and sell it today you would earn a total of 2.00 from holding China Communications Services or generate 3.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Communications Services vs. NTG Nordic Transport
Performance |
| Timeline |
| China Communications |
| NTG Nordic Transport |
China Communications and NTG Nordic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Communications and NTG Nordic
The main advantage of trading using opposite China Communications and NTG Nordic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Communications position performs unexpectedly, NTG Nordic 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 NTG Nordic will offset losses from the drop in NTG Nordic's long position.| China Communications vs. Nippon Telegraph and | China Communications vs. Superior Plus Corp | China Communications vs. NMI Holdings | China Communications vs. SIVERS SEMICONDUCTORS AB |
| NTG Nordic vs. Superior Plus Corp | NTG Nordic vs. NMI Holdings | NTG Nordic vs. SIVERS SEMICONDUCTORS AB | NTG Nordic vs. Talanx AG |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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