Correlation Between Canadian Natural and CHINA EDUCATION
Can any of the company-specific risk be diversified away by investing in both Canadian Natural and CHINA EDUCATION 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 Canadian Natural and CHINA EDUCATION into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Natural Resources and CHINA EDUCATION GROUP, you can compare the effects of market volatilities on Canadian Natural and CHINA EDUCATION 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 Canadian Natural with a short position of CHINA EDUCATION. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Natural and CHINA EDUCATION.
Diversification Opportunities for Canadian Natural and CHINA EDUCATION
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Canadian and CHINA is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Natural Resources and CHINA EDUCATION GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA EDUCATION GROUP and Canadian 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 Canadian Natural Resources are associated (or correlated) with CHINA EDUCATION. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA EDUCATION GROUP has no effect on the direction of Canadian Natural i.e., Canadian Natural and CHINA EDUCATION go up and down completely randomly.
Pair Corralation between Canadian Natural and CHINA EDUCATION
Assuming the 90 days horizon Canadian Natural is expected to generate 2.18 times less return on investment than CHINA EDUCATION. But when comparing it to its historical volatility, Canadian Natural Resources is 2.63 times less risky than CHINA EDUCATION. It trades about 0.05 of its potential returns per unit of risk. CHINA EDUCATION GROUP is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 31.00 in CHINA EDUCATION GROUP on September 12, 2024 and sell it today you would earn a total of 13.00 from holding CHINA EDUCATION GROUP or generate 41.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Natural Resources vs. CHINA EDUCATION GROUP
Performance |
| Timeline |
| Canadian Natural Res |
| CHINA EDUCATION GROUP |
Canadian Natural and CHINA EDUCATION Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Natural and CHINA EDUCATION
The main advantage of trading using opposite Canadian Natural and CHINA EDUCATION positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Natural position performs unexpectedly, CHINA EDUCATION 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 CHINA EDUCATION will offset losses from the drop in CHINA EDUCATION's long position.| Canadian Natural vs. DeVry Education Group | Canadian Natural vs. Vulcan Materials | Canadian Natural vs. Eagle Materials | Canadian Natural vs. EAGLE MATERIALS |
| CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc | CHINA EDUCATION vs. Apple Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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