Correlation Between CHINA SOUTHN and Neoen SA
Can any of the company-specific risk be diversified away by investing in both CHINA SOUTHN and Neoen SA 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 CHINA SOUTHN and Neoen SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CHINA SOUTHN AIR H and Neoen SA, you can compare the effects of market volatilities on CHINA SOUTHN and Neoen SA 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 CHINA SOUTHN with a short position of Neoen SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CHINA SOUTHN and Neoen SA.
Diversification Opportunities for CHINA SOUTHN and Neoen SA
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CHINA and Neoen is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding CHINA SOUTHN AIR H and Neoen SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neoen SA and CHINA SOUTHN 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 CHINA SOUTHN AIR H are associated (or correlated) with Neoen SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neoen SA has no effect on the direction of CHINA SOUTHN i.e., CHINA SOUTHN and Neoen SA go up and down completely randomly.
Pair Corralation between CHINA SOUTHN and Neoen SA
Assuming the 90 days trading horizon CHINA SOUTHN AIR H is expected to under-perform the Neoen SA. In addition to that, CHINA SOUTHN is 12.17 times more volatile than Neoen SA. It trades about -0.09 of its total potential returns per unit of risk. Neoen SA is currently generating about 0.09 per unit of volatility. If you would invest 3,946 in Neoen SA on November 4, 2024 and sell it today you would earn a total of 18.00 from holding Neoen SA or generate 0.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CHINA SOUTHN AIR H vs. Neoen SA
Performance |
| Timeline |
| CHINA SOUTHN AIR |
| Neoen SA |
CHINA SOUTHN and Neoen SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CHINA SOUTHN and Neoen SA
The main advantage of trading using opposite CHINA SOUTHN and Neoen SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CHINA SOUTHN position performs unexpectedly, Neoen SA 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 Neoen SA will offset losses from the drop in Neoen SA's long position.| CHINA SOUTHN vs. Direct Line Insurance | CHINA SOUTHN vs. Webster Financial | CHINA SOUTHN vs. UNIQA INSURANCE GR | CHINA SOUTHN vs. Nomad Foods |
| Neoen SA vs. FAST RETAIL ADR | Neoen SA vs. PICKN PAY STORES | Neoen SA vs. Diamyd Medical AB | Neoen SA vs. MeVis Medical Solutions |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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