Correlation Between National Storage and Aluminumof China

Can any of the company-specific risk be diversified away by investing in both National Storage and Aluminumof China 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 National Storage and Aluminumof China into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between National Storage Affiliates and Aluminum of, you can compare the effects of market volatilities on National Storage and Aluminumof China 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 National Storage with a short position of Aluminumof China. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Storage and Aluminumof China.

Diversification Opportunities for National Storage and Aluminumof China

0.29

Correlation Coefficient

National Storage  Aluminumof China

Modest diversification

The 3 months correlation between National and Aluminumof is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding National Storage Affiliates and Aluminum of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aluminumof China and National Storage 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 National Storage Affiliates are associated (or correlated) with Aluminumof China. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aluminumof China has no effect on the direction of National Storage i.e., National Storage and Aluminumof China go up and down completely randomly.

Pair Corralation between National Storage and Aluminumof China

Assuming the 90 days horizon National Storage is expected to generate 4.41 times less return on investment than Aluminumof China. But when comparing it to its historical volatility, National Storage Affiliates is 1.92 times less risky than Aluminumof China. It trades about 0.02 of its potential returns per unit of risk. Aluminum of is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  29.00  in Aluminum of on October 3, 2024 and sell it today you would earn a total of  27.00  from holding Aluminum of or generate 93.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

National Storage Affiliates  vs.  Aluminum of

National Storage Aff

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Storage Affiliates has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Aluminumof China

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aluminum of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Aluminumof China is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with National Storage and Aluminumof China

The main advantage of trading using opposite National Storage and Aluminumof China positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Storage position performs unexpectedly, Aluminumof China 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 Aluminumof China will offset losses from the drop in Aluminumof China's long position.

The idea behind National Storage Affiliates and Aluminum of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.