Correlation Between Klabin Sa and Nine Dragons
Can any of the company-specific risk be diversified away by investing in both Klabin Sa 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 Klabin Sa and Nine Dragons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Klabin Sa A and Nine Dragons Paper, you can compare the effects of market volatilities on Klabin Sa 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 Klabin Sa with a short position of Nine Dragons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Klabin Sa and Nine Dragons.
Diversification Opportunities for Klabin Sa and Nine Dragons
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Klabin and Nine is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Klabin Sa A 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 Klabin Sa 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 Klabin Sa A 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 Klabin Sa i.e., Klabin Sa and Nine Dragons go up and down completely randomly.
Pair Corralation between Klabin Sa and Nine Dragons
Assuming the 90 days horizon Klabin Sa A is expected to under-perform the Nine Dragons. But the pink sheet apears to be less risky and, when comparing its historical volatility, Klabin Sa A is 2.32 times less risky than Nine Dragons. The pink sheet trades about -0.03 of its potential returns per unit of risk. The Nine Dragons Paper is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 690.00 in Nine Dragons Paper on August 25, 2024 and sell it today you would earn a total of 88.00 from holding Nine Dragons Paper or generate 12.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Klabin Sa A vs. Nine Dragons Paper
Performance |
| Timeline |
| Klabin Sa A |
| Nine Dragons Paper |
Klabin Sa and Nine Dragons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Klabin Sa and Nine Dragons
The main advantage of trading using opposite Klabin Sa and Nine Dragons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Klabin Sa 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.| Klabin Sa vs. Mondi PLC ADR | Klabin Sa vs. Suzano Papel e | Klabin Sa vs. Nine Dragons Paper | Klabin Sa vs. Nine Dragons Paper |
| Nine Dragons vs. Canfor Pulp Products | Nine Dragons vs. Mondi PLC ADR | Nine Dragons vs. Nine Dragons Paper | Nine Dragons vs. Klabin Sa A |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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