Correlation Between Nova Minerals and China Resources
Can any of the company-specific risk be diversified away by investing in both Nova Minerals and China Resources 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 Nova Minerals and China Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nova Minerals Limited and China Resources Beer, you can compare the effects of market volatilities on Nova Minerals and China Resources 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 Nova Minerals with a short position of China Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nova Minerals and China Resources.
Diversification Opportunities for Nova Minerals and China Resources
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Nova and China is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Nova Minerals Limited and China Resources Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Resources Beer and Nova Minerals 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 Nova Minerals Limited are associated (or correlated) with China Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Resources Beer has no effect on the direction of Nova Minerals i.e., Nova Minerals and China Resources go up and down completely randomly.
Pair Corralation between Nova Minerals and China Resources
Assuming the 90 days horizon Nova Minerals Limited is expected to generate 2.51 times more return on investment than China Resources. However, Nova Minerals is 2.51 times more volatile than China Resources Beer. It trades about 0.02 of its potential returns per unit of risk. China Resources Beer is currently generating about -0.02 per unit of risk. If you would invest 42.00 in Nova Minerals Limited on October 13, 2024 and sell it today you would lose (19.00) from holding Nova Minerals Limited or give up 45.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Nova Minerals Limited vs. China Resources Beer
Performance |
| Timeline |
| Nova Minerals Limited |
| China Resources Beer |
Nova Minerals and China Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nova Minerals and China Resources
The main advantage of trading using opposite Nova Minerals and China Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nova Minerals position performs unexpectedly, China Resources 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 Resources will offset losses from the drop in China Resources' long position.| Nova Minerals vs. OBSERVE MEDICAL ASA | Nova Minerals vs. PEPTONIC MEDICAL | Nova Minerals vs. BOSTON BEER A | Nova Minerals vs. Merit Medical Systems |
| China Resources vs. CARSALESCOM | China Resources vs. COMBA TELECOM SYST | China Resources vs. Iridium Communications | China Resources vs. EAGLE MATERIALS |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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