Correlation Between NORWEGIAN AIR and China Coal
Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR and China Coal 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 China Coal 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 China Coal Energy, you can compare the effects of market volatilities on NORWEGIAN AIR and China Coal 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 China Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and China Coal.
Diversification Opportunities for NORWEGIAN AIR and China Coal
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between NORWEGIAN and China is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and China Coal Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Coal Energy 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 China Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Coal Energy has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and China Coal go up and down completely randomly.
Pair Corralation between NORWEGIAN AIR and China Coal
Assuming the 90 days trading horizon NORWEGIAN AIR SHUT is expected to generate 0.99 times more return on investment than China Coal. However, NORWEGIAN AIR SHUT is 1.01 times less risky than China Coal. It trades about 0.19 of its potential returns per unit of risk. China Coal Energy is currently generating about -0.01 per unit of risk. If you would invest 84.00 in NORWEGIAN AIR SHUT on September 5, 2024 and sell it today you would earn a total of 10.00 from holding NORWEGIAN AIR SHUT or generate 11.9% 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. China Coal Energy
Performance |
| Timeline |
| NORWEGIAN AIR SHUT |
| China Coal Energy |
NORWEGIAN AIR and China Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORWEGIAN AIR and China Coal
The main advantage of trading using opposite NORWEGIAN AIR and China Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR position performs unexpectedly, China Coal 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 Coal will offset losses from the drop in China Coal's long position.| NORWEGIAN AIR vs. TOTAL GABON | NORWEGIAN AIR vs. Walgreens Boots Alliance | NORWEGIAN AIR vs. Peak Resources Limited |
| China Coal vs. NORWEGIAN AIR SHUT | China Coal vs. HF SINCLAIR P | China Coal vs. Altair Engineering | China Coal vs. Elmos Semiconductor SE |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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