Correlation Between China Power and Northern Graphite
Can any of the company-specific risk be diversified away by investing in both China Power and Northern Graphite 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 Power and Northern Graphite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Power Equipment and Northern Graphite, you can compare the effects of market volatilities on China Power and Northern Graphite 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 Power with a short position of Northern Graphite. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Power and Northern Graphite.
Diversification Opportunities for China Power and Northern Graphite
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between China and Northern is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding China Power Equipment and Northern Graphite in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Northern Graphite and China Power 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 Power Equipment are associated (or correlated) with Northern Graphite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Northern Graphite has no effect on the direction of China Power i.e., China Power and Northern Graphite go up and down completely randomly.
Pair Corralation between China Power and Northern Graphite
If you would invest 9.31 in Northern Graphite on December 1, 2024 and sell it today you would lose (0.61) from holding Northern Graphite or give up 6.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Power Equipment vs. Northern Graphite
Performance |
| Timeline |
| China Power Equipment |
| Northern Graphite |
China Power and Northern Graphite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Power and Northern Graphite
The main advantage of trading using opposite China Power and Northern Graphite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Power position performs unexpectedly, Northern Graphite 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 Northern Graphite will offset losses from the drop in Northern Graphite's long position.| China Power vs. Gladstone Investment | China Power vs. SLR Investment Corp | China Power vs. Cresud SACIF y | China Power vs. Ambipar Emergency Response |
| Northern Graphite vs. Focus Graphite | Northern Graphite vs. Mason Graphite | Northern Graphite vs. Graphite One | Northern Graphite vs. Syrah Resources Limited |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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