Correlation Between Nine Dragons and Brookdale Senior
Can any of the company-specific risk be diversified away by investing in both Nine Dragons and Brookdale Senior 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 Nine Dragons and Brookdale Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nine Dragons Paper and Brookdale Senior Living, you can compare the effects of market volatilities on Nine Dragons and Brookdale Senior 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 Nine Dragons with a short position of Brookdale Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Dragons and Brookdale Senior.
Diversification Opportunities for Nine Dragons and Brookdale Senior
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nine and Brookdale is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Nine Dragons Paper and Brookdale Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brookdale Senior Living and Nine Dragons 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 Nine Dragons Paper are associated (or correlated) with Brookdale Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brookdale Senior Living has no effect on the direction of Nine Dragons i.e., Nine Dragons and Brookdale Senior go up and down completely randomly.
Pair Corralation between Nine Dragons and Brookdale Senior
Assuming the 90 days horizon Nine Dragons Paper is expected to generate 2.12 times more return on investment than Brookdale Senior. However, Nine Dragons is 2.12 times more volatile than Brookdale Senior Living. It trades about 0.02 of its potential returns per unit of risk. Brookdale Senior Living is currently generating about 0.02 per unit of risk. If you would invest 42.00 in Nine Dragons Paper on August 26, 2024 and sell it today you would lose (2.00) from holding Nine Dragons Paper or give up 4.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nine Dragons Paper vs. Brookdale Senior Living
Performance |
| Timeline |
| Nine Dragons Paper |
| Brookdale Senior Living |
Nine Dragons and Brookdale Senior Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nine Dragons and Brookdale Senior
The main advantage of trading using opposite Nine Dragons and Brookdale Senior positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Dragons position performs unexpectedly, Brookdale Senior 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 Brookdale Senior will offset losses from the drop in Brookdale Senior's long position.| Nine Dragons vs. Sporttotal AG | Nine Dragons vs. BlueScope Steel Limited | Nine Dragons vs. SPORTING | Nine Dragons vs. BLUESCOPE STEEL |
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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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