Correlation Between United Natural and Nine Dragons
Can any of the company-specific risk be diversified away by investing in both United Natural 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 United Natural and Nine Dragons into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United Natural Foods and Nine Dragons Paper, you can compare the effects of market volatilities on United Natural 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 United Natural with a short position of Nine Dragons. Check out your portfolio center. Please also check ongoing floating volatility patterns of United Natural and Nine Dragons.
Diversification Opportunities for United Natural and Nine Dragons
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between United and Nine is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding United Natural Foods 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 United Natural 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 United Natural Foods 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 United Natural i.e., United Natural and Nine Dragons go up and down completely randomly.
Pair Corralation between United Natural and Nine Dragons
Assuming the 90 days horizon United Natural Foods is expected to generate 1.09 times more return on investment than Nine Dragons. However, United Natural is 1.09 times more volatile than Nine Dragons Paper. It trades about -0.12 of its potential returns per unit of risk. Nine Dragons Paper is currently generating about -0.16 per unit of risk. If you would invest 2,503 in United Natural Foods on January 12, 2025 and sell it today you would lose (259.00) from holding United Natural Foods or give up 10.35% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
United Natural Foods vs. Nine Dragons Paper
Performance |
| Timeline |
| United Natural Foods |
| Nine Dragons Paper |
United Natural and Nine Dragons Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United Natural and Nine Dragons
The main advantage of trading using opposite United Natural and Nine Dragons positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United Natural 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.| United Natural vs. BANK OF CHINA | United Natural vs. Cincinnati Financial Corp | United Natural vs. SERI INDUSTRIAL EO | United Natural vs. TFS FINANCIAL |
| Nine Dragons vs. ECHO INVESTMENT ZY | Nine Dragons vs. Stag Industrial | Nine Dragons vs. CapitaLand Investment Limited | Nine Dragons vs. Keck Seng Investments |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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