Correlation Between Nine Dragons and Mondi PLC
Can any of the company-specific risk be diversified away by investing in both Nine Dragons and Mondi PLC 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 Mondi PLC 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 Mondi PLC ADR, you can compare the effects of market volatilities on Nine Dragons and Mondi PLC 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 Mondi PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Dragons and Mondi PLC.
Diversification Opportunities for Nine Dragons and Mondi PLC
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nine and Mondi is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nine Dragons Paper and Mondi PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mondi PLC 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 Mondi PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mondi PLC ADR has no effect on the direction of Nine Dragons i.e., Nine Dragons and Mondi PLC go up and down completely randomly.
Pair Corralation between Nine Dragons and Mondi PLC
Assuming the 90 days horizon Nine Dragons Paper is expected to under-perform the Mondi PLC. In addition to that, Nine Dragons is 1.16 times more volatile than Mondi PLC ADR. It trades about -0.33 of its total potential returns per unit of risk. Mondi PLC ADR is currently generating about -0.26 per unit of volatility. If you would invest 3,285 in Mondi PLC ADR on August 29, 2024 and sell it today you would lose (312.00) from holding Mondi PLC ADR or give up 9.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nine Dragons Paper vs. Mondi PLC ADR
Performance |
| Timeline |
| Nine Dragons Paper |
| Mondi PLC ADR |
Nine Dragons and Mondi PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nine Dragons and Mondi PLC
The main advantage of trading using opposite Nine Dragons and Mondi PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Dragons position performs unexpectedly, Mondi PLC 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 Mondi PLC will offset losses from the drop in Mondi PLC'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 |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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