Correlation Between NTG Nordic and China Resources
Can any of the company-specific risk be diversified away by investing in both NTG Nordic and China Resources 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 NTG Nordic and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NTG Nordic Transport and China Resources Beer, you can compare the effects of market volatilities on NTG Nordic and China Resources 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 NTG Nordic with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of NTG Nordic and China Resources.
Diversification Opportunities for NTG Nordic and China Resources
0.55 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NTG and China is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding NTG Nordic Transport and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer and NTG Nordic 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 NTG Nordic Transport are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of NTG Nordic i.e., NTG Nordic and China Resources go up and down completely randomly.
Pair Corralation between NTG Nordic and China Resources
Assuming the 90 days trading horizon NTG Nordic Transport is expected to generate 0.5 times more return on investment than China Resources. However, NTG Nordic Transport is 2.0 times less risky than China Resources. It trades about -0.05 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.18 per unit of risk. If you would invest 4,005 in NTG Nordic Transport on August 28, 2024 and sell it today you would lose (90.00) from holding NTG Nordic Transport or give up 2.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NTG Nordic Transport vs. China Resources Beer
Performance |
| Timeline |
| NTG Nordic Transport |
| China Resources Beer |
NTG Nordic and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NTG Nordic and China Resources
The main advantage of trading using opposite NTG Nordic and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTG Nordic position performs unexpectedly, China Resources 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 Resources will offset losses from the drop in China Resources' long position.| NTG Nordic vs. China Resources Beer | NTG Nordic vs. MYFAIR GOLD P | NTG Nordic vs. Tsingtao Brewery | NTG Nordic vs. HF SINCLAIR P |
| China Resources vs. LIFENET INSURANCE CO | China Resources vs. INSURANCE AUST GRP | China Resources vs. REVO INSURANCE SPA | China Resources vs. DiamondRock Hospitality |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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