Correlation Between Nine Dragons and Varta AG
Can any of the company-specific risk be diversified away by investing in both Nine Dragons and Varta AG 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 Varta AG 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 Varta AG, you can compare the effects of market volatilities on Nine Dragons and Varta AG 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 Varta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Dragons and Varta AG.
Diversification Opportunities for Nine Dragons and Varta AG
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nine and Varta is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Nine Dragons Paper and Varta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Varta 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 Varta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Varta AG has no effect on the direction of Nine Dragons i.e., Nine Dragons and Varta AG go up and down completely randomly.
Pair Corralation between Nine Dragons and Varta AG
Assuming the 90 days horizon Nine Dragons Paper is expected to generate 0.33 times more return on investment than Varta AG. However, Nine Dragons Paper is 3.07 times less risky than Varta AG. It trades about 0.01 of its potential returns per unit of risk. Varta AG is currently generating about -0.27 per unit of risk. If you would invest 40.00 in Nine Dragons Paper on August 28, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nine Dragons Paper vs. Varta AG
Performance |
| Timeline |
| Nine Dragons Paper |
| Varta AG |
Nine Dragons and Varta AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nine Dragons and Varta AG
The main advantage of trading using opposite Nine Dragons and Varta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Dragons position performs unexpectedly, Varta AG 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 Varta AG will offset losses from the drop in Varta AG's long position.| Nine Dragons vs. China Communications Services | Nine Dragons vs. COMBA TELECOM SYST | Nine Dragons vs. FARO Technologies | Nine Dragons vs. Canadian Utilities Limited |
| Varta AG vs. ECHO INVESTMENT ZY | Varta AG vs. PennyMac Mortgage Investment | Varta AG vs. GALENA MINING LTD | Varta AG vs. MGIC INVESTMENT |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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