Correlation Between Vow ASA and China Natural
Can any of the company-specific risk be diversified away by investing in both Vow ASA and China Natural 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 Vow ASA and China Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vow ASA and China Natural Resources, you can compare the effects of market volatilities on Vow ASA and China Natural 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 Vow ASA with a short position of China Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vow ASA and China Natural.
Diversification Opportunities for Vow ASA and China Natural
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vow and China is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Vow ASA and China Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Natural Resources and Vow ASA 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 Vow ASA are associated (or correlated) with China Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Natural Resources has no effect on the direction of Vow ASA i.e., Vow ASA and China Natural go up and down completely randomly.
Pair Corralation between Vow ASA and China Natural
Assuming the 90 days horizon Vow ASA is expected to under-perform the China Natural. But the pink sheet apears to be less risky and, when comparing its historical volatility, Vow ASA is 1.08 times less risky than China Natural. The pink sheet trades about -0.08 of its potential returns per unit of risk. The China Natural Resources is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 60.00 in China Natural Resources on August 24, 2024 and sell it today you would earn a total of 5.00 from holding China Natural Resources or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.44% |
| Values | Daily Returns |
Vow ASA vs. China Natural Resources
Performance |
| Timeline |
| Vow ASA |
| China Natural Resources |
Vow ASA and China Natural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vow ASA and China Natural
The main advantage of trading using opposite Vow ASA and China Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vow ASA position performs unexpectedly, China Natural 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 Natural will offset losses from the drop in China Natural's long position.| Vow ASA vs. Eestech | Vow ASA vs. Energy and Water | Vow ASA vs. One World Universe | Vow ASA vs. Bion Environmental Technologies |
| China Natural vs. Seychelle Environmtl | China Natural vs. Vow ASA | China Natural vs. Eestech | China Natural vs. Energy and Water |
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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