Correlation Between New China and Hemisphere Energy
Can any of the company-specific risk be diversified away by investing in both New China and Hemisphere Energy 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 New China and Hemisphere Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New China Life and Hemisphere Energy Corp, you can compare the effects of market volatilities on New China and Hemisphere Energy 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 New China with a short position of Hemisphere Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of New China and Hemisphere Energy.
Diversification Opportunities for New China and Hemisphere Energy
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between New and Hemisphere is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding New China Life and Hemisphere Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hemisphere Energy Corp and New China 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 New China Life are associated (or correlated) with Hemisphere Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hemisphere Energy Corp has no effect on the direction of New China i.e., New China and Hemisphere Energy go up and down completely randomly.
Pair Corralation between New China and Hemisphere Energy
Assuming the 90 days trading horizon New China Life is expected to generate 3.28 times more return on investment than Hemisphere Energy. However, New China is 3.28 times more volatile than Hemisphere Energy Corp. It trades about 0.08 of its potential returns per unit of risk. Hemisphere Energy Corp is currently generating about 0.07 per unit of risk. If you would invest 45.00 in New China Life on September 3, 2024 and sell it today you would earn a total of 243.00 from holding New China Life or generate 540.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New China Life vs. Hemisphere Energy Corp
Performance |
| Timeline |
| New China Life |
| Hemisphere Energy Corp |
New China and Hemisphere Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New China and Hemisphere Energy
The main advantage of trading using opposite New China and Hemisphere Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New China position performs unexpectedly, Hemisphere Energy 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 Hemisphere Energy will offset losses from the drop in Hemisphere Energy's long position.| New China vs. Hemisphere Energy Corp | New China vs. Charter Communications | New China vs. MCEWEN MINING INC | New China vs. Ribbon Communications |
| Hemisphere Energy vs. United Breweries Co | Hemisphere Energy vs. JAPAN TOBACCO UNSPADR12 | Hemisphere Energy vs. INDOFOOD AGRI RES | Hemisphere Energy vs. BRIT AMER TOBACCO |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |