Correlation Between NORWEGIAN AIR and BANK OCHINA
Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR and BANK OCHINA 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 BANK OCHINA 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 BANK OCHINA H, you can compare the effects of market volatilities on NORWEGIAN AIR and BANK OCHINA 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 BANK OCHINA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and BANK OCHINA.
Diversification Opportunities for NORWEGIAN AIR and BANK OCHINA
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between NORWEGIAN and BANK is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT and BANK OCHINA H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK OCHINA H 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 BANK OCHINA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK OCHINA H has no effect on the direction of NORWEGIAN AIR i.e., NORWEGIAN AIR and BANK OCHINA go up and down completely randomly.
Pair Corralation between NORWEGIAN AIR and BANK OCHINA
Assuming the 90 days trading horizon NORWEGIAN AIR is expected to generate 1.34 times less return on investment than BANK OCHINA. In addition to that, NORWEGIAN AIR is 1.35 times more volatile than BANK OCHINA H. It trades about 0.03 of its total potential returns per unit of risk. BANK OCHINA H is currently generating about 0.06 per unit of volatility. If you would invest 668.00 in BANK OCHINA H on September 13, 2024 and sell it today you would earn a total of 472.00 from holding BANK OCHINA H or generate 70.66% 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. BANK OCHINA H
Performance |
| Timeline |
| NORWEGIAN AIR SHUT |
| BANK OCHINA H |
NORWEGIAN AIR and BANK OCHINA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORWEGIAN AIR and BANK OCHINA
The main advantage of trading using opposite NORWEGIAN AIR and BANK OCHINA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR position performs unexpectedly, BANK OCHINA 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 BANK OCHINA will offset losses from the drop in BANK OCHINA's long position.| NORWEGIAN AIR vs. Apple Inc | NORWEGIAN AIR vs. Apple Inc | NORWEGIAN AIR vs. Apple Inc | NORWEGIAN AIR vs. Apple Inc |
| BANK OCHINA vs. NORWEGIAN AIR SHUT | BANK OCHINA vs. CarsalesCom | BANK OCHINA vs. FAST RETAIL ADR | BANK OCHINA vs. FLOW TRADERS LTD |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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