Correlation Between Nine Dragons and Gerresheimer
Can any of the company-specific risk be diversified away by investing in both Nine Dragons and Gerresheimer 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 Gerresheimer 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 Gerresheimer AG, you can compare the effects of market volatilities on Nine Dragons and Gerresheimer 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 Gerresheimer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Dragons and Gerresheimer.
Diversification Opportunities for Nine Dragons and Gerresheimer
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nine and Gerresheimer is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nine Dragons Paper and Gerresheimer AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gerresheimer AG 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 Gerresheimer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gerresheimer AG has no effect on the direction of Nine Dragons i.e., Nine Dragons and Gerresheimer go up and down completely randomly.
Pair Corralation between Nine Dragons and Gerresheimer
Assuming the 90 days horizon Nine Dragons Paper is expected to generate 1.2 times more return on investment than Gerresheimer. However, Nine Dragons is 1.2 times more volatile than Gerresheimer AG. It trades about -0.09 of its potential returns per unit of risk. Gerresheimer AG is currently generating about -0.19 per unit of risk. If you would invest 39.00 in Nine Dragons Paper on August 30, 2024 and sell it today you would lose (2.00) from holding Nine Dragons Paper or give up 5.13% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nine Dragons Paper vs. Gerresheimer AG
Performance |
| Timeline |
| Nine Dragons Paper |
| Gerresheimer AG |
Nine Dragons and Gerresheimer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nine Dragons and Gerresheimer
The main advantage of trading using opposite Nine Dragons and Gerresheimer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Dragons position performs unexpectedly, Gerresheimer 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 Gerresheimer will offset losses from the drop in Gerresheimer's long position.| Nine Dragons vs. TFS FINANCIAL | Nine Dragons vs. Webster Financial | Nine Dragons vs. STORE ELECTRONIC | Nine Dragons vs. STMicroelectronics NV |
| Gerresheimer vs. Becton Dickinson and | Gerresheimer vs. HOYA Corporation | Gerresheimer vs. Superior Plus Corp | Gerresheimer vs. NMI Holdings |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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