Correlation Between Nine Dragons and Holmen AB
Can any of the company-specific risk be diversified away by investing in both Nine Dragons and Holmen AB 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 Holmen AB 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 Holmen AB ADR, you can compare the effects of market volatilities on Nine Dragons and Holmen AB 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 Holmen AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Dragons and Holmen AB.
Diversification Opportunities for Nine Dragons and Holmen AB
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nine and Holmen is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Nine Dragons Paper and Holmen AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmen AB ADR 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 Holmen AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holmen AB ADR has no effect on the direction of Nine Dragons i.e., Nine Dragons and Holmen AB go up and down completely randomly.
Pair Corralation between Nine Dragons and Holmen AB
Assuming the 90 days horizon Nine Dragons Paper is expected to under-perform the Holmen AB. In addition to that, Nine Dragons is 4.67 times more volatile than Holmen AB ADR. It trades about 0.0 of its total potential returns per unit of risk. Holmen AB ADR is currently generating about 0.03 per unit of volatility. If you would invest 1,891 in Holmen AB ADR on August 25, 2024 and sell it today you would earn a total of 234.00 from holding Holmen AB ADR or generate 12.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nine Dragons Paper vs. Holmen AB ADR
Performance |
| Timeline |
| Nine Dragons Paper |
| Holmen AB ADR |
Nine Dragons and Holmen AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nine Dragons and Holmen AB
The main advantage of trading using opposite Nine Dragons and Holmen AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Dragons position performs unexpectedly, Holmen AB 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 Holmen AB will offset losses from the drop in Holmen AB'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 |
| Holmen AB vs. Mondi PLC ADR | Holmen AB vs. Canfor Pulp Products | Holmen AB vs. Nine Dragons Paper | Holmen AB vs. Sylvamo Corp |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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