Correlation Between Contact Financial and Natural Gas
Can any of the company-specific risk be diversified away by investing in both Contact Financial and Natural Gas 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 Contact Financial and Natural Gas into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Contact Financial Holding and Natural Gas Mining, you can compare the effects of market volatilities on Contact Financial and Natural Gas 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 Contact Financial with a short position of Natural Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Contact Financial and Natural Gas.
Diversification Opportunities for Contact Financial and Natural Gas
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Contact and Natural is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Contact Financial Holding and Natural Gas Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Gas Mining and Contact Financial 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 Contact Financial Holding are associated (or correlated) with Natural Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Gas Mining has no effect on the direction of Contact Financial i.e., Contact Financial and Natural Gas go up and down completely randomly.
Pair Corralation between Contact Financial and Natural Gas
Assuming the 90 days trading horizon Contact Financial Holding is expected to under-perform the Natural Gas. But the stock apears to be less risky and, when comparing its historical volatility, Contact Financial Holding is 1.11 times less risky than Natural Gas. The stock trades about -0.47 of its potential returns per unit of risk. The Natural Gas Mining is currently generating about -0.17 of returns per unit of risk over similar time horizon. If you would invest 4,265 in Natural Gas Mining on September 14, 2024 and sell it today you would lose (169.00) from holding Natural Gas Mining or give up 3.96% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Contact Financial Holding vs. Natural Gas Mining
Performance |
| Timeline |
| Contact Financial Holding |
| Natural Gas Mining |
Contact Financial and Natural Gas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Contact Financial and Natural Gas
The main advantage of trading using opposite Contact Financial and Natural Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Contact Financial position performs unexpectedly, Natural Gas 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 Natural Gas will offset losses from the drop in Natural Gas' long position.| Contact Financial vs. Paint Chemicals Industries | Contact Financial vs. Reacap Financial Investments | Contact Financial vs. Egyptians For Investment | Contact Financial vs. Misr Oils Soap |
| Natural Gas vs. Paint Chemicals Industries | Natural Gas vs. Reacap Financial Investments | Natural Gas vs. Egyptians For Investment | Natural Gas vs. Misr Oils Soap |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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