Correlation Between Nine Dragons and Canfor Pulp
Can any of the company-specific risk be diversified away by investing in both Nine Dragons and Canfor Pulp 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 Canfor Pulp 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 Canfor Pulp Products, you can compare the effects of market volatilities on Nine Dragons and Canfor Pulp 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 Canfor Pulp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Dragons and Canfor Pulp.
Diversification Opportunities for Nine Dragons and Canfor Pulp
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nine and Canfor is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Nine Dragons Paper and Canfor Pulp Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Canfor Pulp Products 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 Canfor Pulp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Canfor Pulp Products has no effect on the direction of Nine Dragons i.e., Nine Dragons and Canfor Pulp go up and down completely randomly.
Pair Corralation between Nine Dragons and Canfor Pulp
Assuming the 90 days horizon Nine Dragons Paper is expected to under-perform the Canfor Pulp. But the pink sheet apears to be less risky and, when comparing its historical volatility, Nine Dragons Paper is 1.34 times less risky than Canfor Pulp. The pink sheet trades about -0.33 of its potential returns per unit of risk. The Canfor Pulp Products is currently generating about -0.23 of returns per unit of risk over similar time horizon. If you would invest 70.00 in Canfor Pulp Products on August 29, 2024 and sell it today you would lose (9.00) from holding Canfor Pulp Products or give up 12.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nine Dragons Paper vs. Canfor Pulp Products
Performance |
| Timeline |
| Nine Dragons Paper |
| Canfor Pulp Products |
Nine Dragons and Canfor Pulp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nine Dragons and Canfor Pulp
The main advantage of trading using opposite Nine Dragons and Canfor Pulp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Dragons position performs unexpectedly, Canfor Pulp 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 Canfor Pulp will offset losses from the drop in Canfor Pulp's long position.| Nine Dragons vs. Canfor Pulp Products | Nine Dragons vs. Mondi PLC ADR | Nine Dragons vs. Nine Dragons Paper | Nine Dragons vs. Klabin Sa A |
| Canfor Pulp vs. Nine Dragons Paper | Canfor Pulp vs. Nine Dragons Paper | Canfor Pulp vs. Mondi PLC ADR | Canfor Pulp vs. Klabin Sa A |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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