Correlation Between Suzano SA and Nine Dragons
Can any of the company-specific risk be diversified away by investing in both Suzano SA 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 Suzano SA and Nine Dragons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Suzano SA and Nine Dragons Paper, you can compare the effects of market volatilities on Suzano SA 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 Suzano SA with a short position of Nine Dragons. Check out your portfolio center. Please also check ongoing floating volatility patterns of Suzano SA and Nine Dragons.
Diversification Opportunities for Suzano SA and Nine Dragons
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Suzano and Nine is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Suzano SA 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 Suzano SA 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 Suzano SA 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 Suzano SA i.e., Suzano SA and Nine Dragons go up and down completely randomly.
Pair Corralation between Suzano SA and Nine Dragons
Assuming the 90 days trading horizon Suzano SA is expected to generate 0.57 times more return on investment than Nine Dragons. However, Suzano SA is 1.74 times less risky than Nine Dragons. It trades about 0.2 of its potential returns per unit of risk. Nine Dragons Paper is currently generating about 0.01 per unit of risk. If you would invest 950.00 in Suzano SA on August 27, 2024 and sell it today you would earn a total of 50.00 from holding Suzano SA or generate 5.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Suzano SA vs. Nine Dragons Paper
Performance |
| Timeline |
| Suzano SA |
| Nine Dragons Paper |
Suzano SA and Nine Dragons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Suzano SA and Nine Dragons
The main advantage of trading using opposite Suzano SA and Nine Dragons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Suzano SA 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.| Suzano SA vs. UPM Kymmene Oyj | Suzano SA vs. STORA ENSO OYJ | Suzano SA vs. Stora Enso Oyj | Suzano SA vs. Suzano SA |
| Nine Dragons vs. China Communications Services | Nine Dragons vs. COMBA TELECOM SYST | Nine Dragons vs. FARO Technologies | Nine Dragons vs. Canadian Utilities Limited |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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