Correlation Between NIPPON STEEL and China Mobile
Can any of the company-specific risk be diversified away by investing in both NIPPON STEEL and China Mobile 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 NIPPON STEEL and China Mobile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIPPON STEEL SPADR and China Mobile Limited, you can compare the effects of market volatilities on NIPPON STEEL and China Mobile 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 NIPPON STEEL with a short position of China Mobile. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIPPON STEEL and China Mobile.
Diversification Opportunities for NIPPON STEEL and China Mobile
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NIPPON and China is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding NIPPON STEEL SPADR and China Mobile Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Mobile Limited and NIPPON STEEL 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 NIPPON STEEL SPADR are associated (or correlated) with China Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Mobile Limited has no effect on the direction of NIPPON STEEL i.e., NIPPON STEEL and China Mobile go up and down completely randomly.
Pair Corralation between NIPPON STEEL and China Mobile
If you would invest 595.00 in NIPPON STEEL SPADR on August 31, 2024 and sell it today you would earn a total of 20.00 from holding NIPPON STEEL SPADR or generate 3.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIPPON STEEL SPADR vs. China Mobile Limited
Performance |
| Timeline |
| NIPPON STEEL SPADR |
| China Mobile Limited |
NIPPON STEEL and China Mobile Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIPPON STEEL and China Mobile
The main advantage of trading using opposite NIPPON STEEL and China Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIPPON STEEL position performs unexpectedly, China Mobile 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 China Mobile will offset losses from the drop in China Mobile's long position.The idea behind NIPPON STEEL SPADR and China Mobile Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| China Mobile vs. Rogers Communications | China Mobile vs. Iridium Communications | China Mobile vs. Coor Service Management | China Mobile vs. Citic Telecom International |
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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