Correlation Between Franco Nevada and CHINA HUARONG
Can any of the company-specific risk be diversified away by investing in both Franco Nevada and CHINA HUARONG 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 Franco Nevada and CHINA HUARONG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Franco Nevada and CHINA HUARONG ENERHD 50, you can compare the effects of market volatilities on Franco Nevada and CHINA HUARONG 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 Franco Nevada with a short position of CHINA HUARONG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Franco Nevada and CHINA HUARONG.
Diversification Opportunities for Franco Nevada and CHINA HUARONG
-0.69 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Franco and CHINA is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Franco Nevada and CHINA HUARONG ENERHD 50 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHINA HUARONG ENERHD and Franco Nevada 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 Franco Nevada are associated (or correlated) with CHINA HUARONG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHINA HUARONG ENERHD has no effect on the direction of Franco Nevada i.e., Franco Nevada and CHINA HUARONG go up and down completely randomly.
Pair Corralation between Franco Nevada and CHINA HUARONG
Assuming the 90 days horizon Franco Nevada is expected to generate 0.08 times more return on investment than CHINA HUARONG. However, Franco Nevada is 13.19 times less risky than CHINA HUARONG. It trades about 0.25 of its potential returns per unit of risk. CHINA HUARONG ENERHD 50 is currently generating about 0.02 per unit of risk. If you would invest 11,321 in Franco Nevada on December 28, 2024 and sell it today you would earn a total of 3,139 from holding Franco Nevada or generate 27.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Franco Nevada vs. CHINA HUARONG ENERHD 50
Performance |
Timeline |
Franco Nevada |
CHINA HUARONG ENERHD |
Franco Nevada and CHINA HUARONG Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Franco Nevada and CHINA HUARONG
The main advantage of trading using opposite Franco Nevada and CHINA HUARONG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Franco Nevada position performs unexpectedly, CHINA HUARONG 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 HUARONG will offset losses from the drop in CHINA HUARONG's long position.Franco Nevada vs. ADRIATIC METALS LS 013355 | Franco Nevada vs. BORR DRILLING NEW | Franco Nevada vs. AUSTRALASIAN METALS LTD | Franco Nevada vs. CanSino Biologics |
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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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