Correlation Between NORWEGIAN AIR and Beijing MediaLimited
Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR and Beijing MediaLimited 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 NORWEGIAN AIR and Beijing MediaLimited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NORWEGIAN AIR SHUT and Beijing Media, you can compare the effects of market volatilities on NORWEGIAN AIR and Beijing MediaLimited 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 NORWEGIAN AIR with a short position of Beijing MediaLimited. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and Beijing MediaLimited.
Diversification Opportunities for NORWEGIAN AIR and Beijing MediaLimited
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between NORWEGIAN and Beijing is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and Beijing Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beijing MediaLimited and NORWEGIAN AIR 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 NORWEGIAN AIR SHUT are associated (or correlated) with Beijing MediaLimited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beijing MediaLimited has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and Beijing MediaLimited go up and down completely randomly.
Pair Corralation between NORWEGIAN AIR and Beijing MediaLimited
Assuming the 90 days trading horizon NORWEGIAN AIR SHUT is expected to generate 0.51 times more return on investment than Beijing MediaLimited. However, NORWEGIAN AIR SHUT is 1.97 times less risky than Beijing MediaLimited. It trades about 0.03 of its potential returns per unit of risk. Beijing Media is currently generating about 0.01 per unit of risk. If you would invest 81.00 in NORWEGIAN AIR SHUT on November 28, 2024 and sell it today you would earn a total of 15.00 from holding NORWEGIAN AIR SHUT or generate 18.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NORWEGIAN AIR SHUT vs. Beijing Media
Performance |
| Timeline |
| NORWEGIAN AIR SHUT |
| Beijing MediaLimited |
NORWEGIAN AIR and Beijing MediaLimited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORWEGIAN AIR and Beijing MediaLimited
The main advantage of trading using opposite NORWEGIAN AIR and Beijing MediaLimited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR position performs unexpectedly, Beijing MediaLimited 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 Beijing MediaLimited will offset losses from the drop in Beijing MediaLimited's long position.| NORWEGIAN AIR vs. Perseus Mining Limited | NORWEGIAN AIR vs. Jacquet Metal Service | NORWEGIAN AIR vs. PKSHA TECHNOLOGY INC | NORWEGIAN AIR vs. Firan Technology Group |
| Beijing MediaLimited vs. Easy Software AG | Beijing MediaLimited vs. National Health Investors | Beijing MediaLimited vs. Beta Systems Software | Beijing MediaLimited vs. Sunny Optical Technology |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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