Correlation Between Nine Dragons and Oji Holdings
Can any of the company-specific risk be diversified away by investing in both Nine Dragons and Oji Holdings 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 Oji Holdings 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 Oji Holdings Corp, you can compare the effects of market volatilities on Nine Dragons and Oji Holdings 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 Oji Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Dragons and Oji Holdings.
Diversification Opportunities for Nine Dragons and Oji Holdings
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nine and Oji is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nine Dragons Paper and Oji Holdings Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oji Holdings Corp 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 Oji Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oji Holdings Corp has no effect on the direction of Nine Dragons i.e., Nine Dragons and Oji Holdings go up and down completely randomly.
Pair Corralation between Nine Dragons and Oji Holdings
Assuming the 90 days horizon Nine Dragons Paper is expected to under-perform the Oji Holdings. But the pink sheet apears to be less risky and, when comparing its historical volatility, Nine Dragons Paper is 3.29 times less risky than Oji Holdings. The pink sheet trades about -0.34 of its potential returns per unit of risk. The Oji Holdings Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 3,389 in Oji Holdings Corp on October 12, 2024 and sell it today you would lose (4.00) from holding Oji Holdings Corp or give up 0.12% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nine Dragons Paper vs. Oji Holdings Corp
Performance |
| Timeline |
| Nine Dragons Paper |
| Oji Holdings Corp |
Nine Dragons and Oji Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nine Dragons and Oji Holdings
The main advantage of trading using opposite Nine Dragons and Oji Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nine Dragons position performs unexpectedly, Oji Holdings 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 Oji Holdings will offset losses from the drop in Oji Holdings' 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 |
| Oji Holdings vs. BillerudKorsns AB | Oji Holdings vs. Nine Dragons Paper | Oji Holdings vs. Nine Dragons Paper | Oji Holdings vs. Canfor Pulp Products |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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