Correlation Between Northern Data and China Mobile
Can any of the company-specific risk be diversified away by investing in both Northern Data 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 Northern Data and China Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Data AG and China Life Insurance, you can compare the effects of market volatilities on Northern Data 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 Northern Data with a short position of China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Data and China Mobile.
Diversification Opportunities for Northern Data and China Mobile
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Northern and China is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Northern Data AG 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 Northern Data 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 Northern Data AG 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 Northern Data i.e., Northern Data and China Mobile go up and down completely randomly.
Pair Corralation between Northern Data and China Mobile
Assuming the 90 days trading horizon Northern Data AG is expected to under-perform the China Mobile. In addition to that, Northern Data is 1.16 times more volatile than China Life Insurance. It trades about -0.33 of its total potential returns per unit of risk. China Life Insurance is currently generating about 0.06 per unit of volatility. If you would invest 171.00 in China Life Insurance on November 3, 2024 and sell it today you would earn a total of 3.00 from holding China Life Insurance or generate 1.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Northern Data AG vs. China Life Insurance
Performance |
| Timeline |
| Northern Data AG |
| China Life Insurance |
Northern Data and China Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Northern Data and China Mobile
The main advantage of trading using opposite Northern Data and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Data 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.| Northern Data vs. ANTA SPORTS PRODUCT | Northern Data vs. SPORT LISBOA E | Northern Data vs. BJs Restaurants | Northern Data vs. Tower Semiconductor |
| China Mobile vs. Japan Tobacco | China Mobile vs. TITAN MACHINERY | China Mobile vs. Tokyu Construction Co | China Mobile vs. Titan Machinery |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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