Correlation Between NYSE Composite and Nine Dragons
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Nine Dragons 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 NYSE Composite and Nine Dragons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Nine Dragons Paper, you can compare the effects of market volatilities on NYSE Composite and Nine Dragons 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 NYSE Composite with a short position of Nine Dragons. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Nine Dragons.
Diversification Opportunities for NYSE Composite and Nine Dragons
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between NYSE and Nine is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Nine Dragons Paper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nine Dragons Paper and NYSE Composite 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 NYSE Composite are associated (or correlated) with Nine Dragons. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nine Dragons Paper has no effect on the direction of NYSE Composite i.e., NYSE Composite and Nine Dragons go up and down completely randomly.
Pair Corralation between NYSE Composite and Nine Dragons
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.35 times more return on investment than Nine Dragons. However, NYSE Composite is 2.89 times less risky than Nine Dragons. It trades about 0.19 of its potential returns per unit of risk. Nine Dragons Paper is currently generating about -0.33 per unit of risk. If you would invest 1,956,073 in NYSE Composite on August 25, 2024 and sell it today you would earn a total of 56,272 from holding NYSE Composite or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NYSE Composite vs. Nine Dragons Paper
Performance |
| Timeline |
NYSE Composite and Nine Dragons Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Nine Dragons Paper
Pair trading matchups for Nine Dragons
Pair Trading with NYSE Composite and Nine Dragons
The main advantage of trading using opposite NYSE Composite and Nine Dragons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Nine Dragons 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 Nine Dragons will offset losses from the drop in Nine Dragons' long position.| NYSE Composite vs. Glacier Bancorp | NYSE Composite vs. LithiumBank Resources Corp | NYSE Composite vs. Stepstone Group | NYSE Composite vs. Pintec Technology Holdings |
| Nine Dragons vs. Canfor Pulp Products | Nine Dragons vs. Mondi PLC ADR | Nine Dragons vs. Nine Dragons Paper | Nine Dragons vs. Klabin Sa A |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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