Correlation Between Holmen AB and Nine Dragons
Can any of the company-specific risk be diversified away by investing in both Holmen AB and Nine Dragons 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 Holmen AB and Nine Dragons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holmen AB ADR and Nine Dragons Paper, you can compare the effects of market volatilities on Holmen AB and Nine Dragons 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 Holmen AB with a short position of Nine Dragons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holmen AB and Nine Dragons.
Diversification Opportunities for Holmen AB and Nine Dragons
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Holmen and Nine is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Holmen AB ADR and Nine Dragons Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Dragons Paper and Holmen AB 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 Holmen AB ADR are associated (or correlated) with Nine Dragons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Dragons Paper has no effect on the direction of Holmen AB i.e., Holmen AB and Nine Dragons go up and down completely randomly.
Pair Corralation between Holmen AB and Nine Dragons
If you would invest 46.00 in Nine Dragons Paper on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Nine Dragons Paper or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holmen AB ADR vs. Nine Dragons Paper
Performance |
| Timeline |
| Holmen AB ADR |
| Nine Dragons Paper |
Holmen AB and Nine Dragons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holmen AB and Nine Dragons
The main advantage of trading using opposite Holmen AB and Nine Dragons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holmen AB position performs unexpectedly, Nine Dragons 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 Nine Dragons will offset losses from the drop in Nine Dragons' long position.| Holmen AB vs. Mondi PLC ADR | Holmen AB vs. Canfor Pulp Products | Holmen AB vs. Nine Dragons Paper | Holmen AB vs. Sylvamo Corp |
| Nine Dragons vs. Canfor Pulp Products | Nine Dragons vs. Mondi PLC ADR | Nine Dragons vs. Klabin Sa A | Nine Dragons vs. Nine Dragons Paper |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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