Correlation Between BANK OCHINA and NORWEGIAN AIR
Can any of the company-specific risk be diversified away by investing in both BANK OCHINA and NORWEGIAN AIR 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 BANK OCHINA and NORWEGIAN AIR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BANK OCHINA H and NORWEGIAN AIR SHUT, you can compare the effects of market volatilities on BANK OCHINA and NORWEGIAN AIR 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 BANK OCHINA with a short position of NORWEGIAN AIR. Check out your portfolio center. Please also check ongoing floating volatility patterns of BANK OCHINA and NORWEGIAN AIR.
Diversification Opportunities for BANK OCHINA and NORWEGIAN AIR
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between BANK and NORWEGIAN is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding BANK OCHINA H and NORWEGIAN AIR SHUT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NORWEGIAN AIR SHUT and BANK OCHINA 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 BANK OCHINA H are associated (or correlated) with NORWEGIAN AIR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NORWEGIAN AIR SHUT has no effect on the direction of BANK OCHINA i.e., BANK OCHINA and NORWEGIAN AIR go up and down completely randomly.
Pair Corralation between BANK OCHINA and NORWEGIAN AIR
Assuming the 90 days trading horizon BANK OCHINA H is expected to generate 0.74 times more return on investment than NORWEGIAN AIR. However, BANK OCHINA H is 1.35 times less risky than NORWEGIAN AIR. It trades about 0.06 of its potential returns per unit of risk. NORWEGIAN AIR SHUT is currently generating about 0.03 per unit of risk. If you would invest 668.00 in BANK OCHINA H on September 13, 2024 and sell it today you would earn a total of 472.00 from holding BANK OCHINA H or generate 70.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
BANK OCHINA H vs. NORWEGIAN AIR SHUT
Performance |
| Timeline |
| BANK OCHINA H |
| NORWEGIAN AIR SHUT |
BANK OCHINA and NORWEGIAN AIR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BANK OCHINA and NORWEGIAN AIR
The main advantage of trading using opposite BANK OCHINA and NORWEGIAN AIR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BANK OCHINA position performs unexpectedly, NORWEGIAN AIR 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 NORWEGIAN AIR will offset losses from the drop in NORWEGIAN AIR's long position.| BANK OCHINA vs. NORWEGIAN AIR SHUT | BANK OCHINA vs. CarsalesCom | BANK OCHINA vs. FAST RETAIL ADR | BANK OCHINA vs. FLOW TRADERS LTD |
| NORWEGIAN AIR vs. Apple Inc | NORWEGIAN AIR vs. Apple Inc | NORWEGIAN AIR vs. Apple Inc | NORWEGIAN AIR vs. Apple Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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