Correlation Between Nintendo and CHINA HUARONG
Can any of the company-specific risk be diversified away by investing in both Nintendo and CHINA HUARONG 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 Nintendo and CHINA HUARONG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nintendo Co and CHINA HUARONG ENERHD 50, you can compare the effects of market volatilities on Nintendo and CHINA HUARONG 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 Nintendo with a short position of CHINA HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nintendo and CHINA HUARONG.
Diversification Opportunities for Nintendo and CHINA HUARONG
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nintendo and CHINA is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Nintendo Co and CHINA HUARONG ENERHD 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA HUARONG ENERHD and Nintendo 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 Nintendo Co are associated (or correlated) with CHINA HUARONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA HUARONG ENERHD has no effect on the direction of Nintendo i.e., Nintendo and CHINA HUARONG go up and down completely randomly.
Pair Corralation between Nintendo and CHINA HUARONG
Assuming the 90 days trading horizon Nintendo is expected to generate 15.68 times less return on investment than CHINA HUARONG. But when comparing it to its historical volatility, Nintendo Co is 12.7 times less risky than CHINA HUARONG. It trades about 0.06 of its potential returns per unit of risk. CHINA HUARONG ENERHD 50 is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 0.15 in CHINA HUARONG ENERHD 50 on October 20, 2024 and sell it today you would lose (0.05) from holding CHINA HUARONG ENERHD 50 or give up 33.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nintendo Co vs. CHINA HUARONG ENERHD 50
Performance |
| Timeline |
| Nintendo |
| CHINA HUARONG ENERHD |
Nintendo and CHINA HUARONG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nintendo and CHINA HUARONG
The main advantage of trading using opposite Nintendo and CHINA HUARONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nintendo position performs unexpectedly, CHINA HUARONG 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 HUARONG will offset losses from the drop in CHINA HUARONG's long position.The idea behind Nintendo Co and CHINA HUARONG ENERHD 50 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 HUARONG vs. Alibaba Group Holding | CHINA HUARONG vs. ConocoPhillips | CHINA HUARONG vs. CNOOC | CHINA HUARONG vs. EOG Resources |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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