Correlation Between China Datang and Nippon Light
Can any of the company-specific risk be diversified away by investing in both China Datang and Nippon Light 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 Datang and Nippon Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Datang and Nippon Light Metal, you can compare the effects of market volatilities on China Datang and Nippon Light 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 Datang with a short position of Nippon Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Datang and Nippon Light.
Diversification Opportunities for China Datang and Nippon Light
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between China and Nippon is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding China Datang and Nippon Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Light Metal and China Datang 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 Datang are associated (or correlated) with Nippon Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Light Metal has no effect on the direction of China Datang i.e., China Datang and Nippon Light go up and down completely randomly.
Pair Corralation between China Datang and Nippon Light
Assuming the 90 days horizon China Datang is expected to generate 2.25 times more return on investment than Nippon Light. However, China Datang is 2.25 times more volatile than Nippon Light Metal. It trades about 0.1 of its potential returns per unit of risk. Nippon Light Metal is currently generating about -0.03 per unit of risk. If you would invest 19.00 in China Datang on November 2, 2024 and sell it today you would earn a total of 6.00 from holding China Datang or generate 31.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Datang vs. Nippon Light Metal
Performance |
| Timeline |
| China Datang |
| Nippon Light Metal |
China Datang and Nippon Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Datang and Nippon Light
The main advantage of trading using opposite China Datang and Nippon Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Datang position performs unexpectedly, Nippon Light 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 Nippon Light will offset losses from the drop in Nippon Light's long position.| China Datang vs. InterContinental Hotels Group | China Datang vs. Aristocrat Leisure Limited | China Datang vs. Urban Outfitters | China Datang vs. Xenia Hotels Resorts |
| Nippon Light vs. Molson Coors Beverage | Nippon Light vs. Fevertree Drinks PLC | Nippon Light vs. PLANT VEDA FOODS | Nippon Light vs. Suntory Beverage Food |
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.
Other Complementary Tools
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Odds Of Bankruptcy Get analysis of equity chance of financial distress in the next 2 years | |
| Insider Screener Find insiders across different sectors to evaluate their impact on performance |