Correlation Between Nasdaq and Long Bon
Can any of the company-specific risk be diversified away by investing in both Nasdaq and Long Bon 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 Nasdaq and Long Bon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq Inc and Long Bon International, you can compare the effects of market volatilities on Nasdaq and Long Bon 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 Nasdaq with a short position of Long Bon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Long Bon.
Diversification Opportunities for Nasdaq and Long Bon
Good diversification
The 3 months correlation between Nasdaq and Long is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Long Bon International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long Bon International and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Long Bon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long Bon International has no effect on the direction of Nasdaq i.e., Nasdaq and Long Bon go up and down completely randomly.
Pair Corralation between Nasdaq and Long Bon
Given the investment horizon of 90 days Nasdaq Inc is expected to generate 0.73 times more return on investment than Long Bon. However, Nasdaq Inc is 1.37 times less risky than Long Bon. It trades about 0.16 of its potential returns per unit of risk. Long Bon International is currently generating about 0.02 per unit of risk. If you would invest 7,249 in Nasdaq Inc on September 17, 2024 and sell it today you would earn a total of 763.00 from holding Nasdaq Inc or generate 10.53% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 96.92% |
Values | Daily Returns |
Nasdaq Inc vs. Long Bon International
Performance |
Timeline |
Nasdaq Inc |
Long Bon International |
Nasdaq and Long Bon Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nasdaq and Long Bon
The main advantage of trading using opposite Nasdaq and Long Bon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq position performs unexpectedly, Long Bon 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 Long Bon will offset losses from the drop in Long Bon's long position.The idea behind Nasdaq Inc and Long Bon International 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.Long Bon vs. Hung Sheng Construction | Long Bon vs. Kee Tai Properties | Long Bon vs. BES Engineering Co | Long Bon vs. Chainqui Construction Development |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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