Correlation Between NORWEGIAN AIR and CHINA HUARONG
Can any of the company-specific risk be diversified away by investing in both NORWEGIAN AIR 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 NORWEGIAN AIR and CHINA HUARONG 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 HUARONG ENERHD 50, you can compare the effects of market volatilities on NORWEGIAN AIR 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 NORWEGIAN AIR with a short position of CHINA HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NORWEGIAN AIR and CHINA HUARONG.
Diversification Opportunities for NORWEGIAN AIR and CHINA HUARONG
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between NORWEGIAN and CHINA is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding NORWEGIAN AIR SHUT 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 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 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 NORWEGIAN AIR i.e., NORWEGIAN AIR and CHINA HUARONG go up and down completely randomly.
Pair Corralation between NORWEGIAN AIR and CHINA HUARONG
Assuming the 90 days trading horizon NORWEGIAN AIR SHUT is expected to generate 0.17 times more return on investment than CHINA HUARONG. However, NORWEGIAN AIR SHUT is 5.89 times less risky than CHINA HUARONG. It trades about 0.17 of its potential returns per unit of risk. CHINA HUARONG ENERHD 50 is currently generating about -0.03 per unit of risk. If you would invest 92.00 in NORWEGIAN AIR SHUT on September 13, 2024 and sell it today you would earn a total of 8.00 from holding NORWEGIAN AIR SHUT or generate 8.7% 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 HUARONG ENERHD 50
Performance |
| Timeline |
| NORWEGIAN AIR SHUT |
| CHINA HUARONG ENERHD |
NORWEGIAN AIR and CHINA HUARONG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NORWEGIAN AIR and CHINA HUARONG
The main advantage of trading using opposite NORWEGIAN AIR and CHINA HUARONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NORWEGIAN AIR 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.| NORWEGIAN AIR vs. Apple Inc | NORWEGIAN AIR vs. Apple Inc | NORWEGIAN AIR vs. Apple Inc | NORWEGIAN AIR vs. Apple Inc |
| CHINA HUARONG vs. WILLIS LEASE FIN | CHINA HUARONG vs. SAFETY MEDICAL PROD | CHINA HUARONG vs. AVITA Medical | CHINA HUARONG vs. CarsalesCom |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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