Correlation Between Natural Health and China Mobile
Can any of the company-specific risk be diversified away by investing in both Natural Health and China Mobile 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 Natural Health and China Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Natural Health Trends and China Life Insurance, you can compare the effects of market volatilities on Natural Health and China Mobile 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 Natural Health with a short position of China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Natural Health and China Mobile.
Diversification Opportunities for Natural Health and China Mobile
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Natural and China is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Natural Health Trends and China Life Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Life Insurance and Natural Health 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 Natural Health Trends are associated (or correlated) with China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Life Insurance has no effect on the direction of Natural Health i.e., Natural Health and China Mobile go up and down completely randomly.
Pair Corralation between Natural Health and China Mobile
Assuming the 90 days trading horizon Natural Health Trends is expected to under-perform the China Mobile. But the stock apears to be less risky and, when comparing its historical volatility, Natural Health Trends is 2.52 times less risky than China Mobile. The stock trades about -0.03 of its potential returns per unit of risk. The China Life Insurance is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 74.00 in China Life Insurance on September 3, 2024 and sell it today you would earn a total of 105.00 from holding China Life Insurance or generate 141.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Natural Health Trends vs. China Life Insurance
Performance |
| Timeline |
| Natural Health Trends |
| China Life Insurance |
Natural Health and China Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Natural Health and China Mobile
The main advantage of trading using opposite Natural Health and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Natural Health position performs unexpectedly, China Mobile 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 China Mobile will offset losses from the drop in China Mobile's long position.| Natural Health vs. CITY OFFICE REIT | Natural Health vs. WillScot Mobile Mini | Natural Health vs. KIMBALL ELECTRONICS | Natural Health vs. ELECTRONIC ARTS |
| China Mobile vs. Applied Materials | China Mobile vs. Goodyear Tire Rubber | China Mobile vs. THRACE PLASTICS | China Mobile vs. Vulcan Materials |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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