Correlation Between Norfolk Southern and CanSino Biologics

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Can any of the company-specific risk be diversified away by investing in both Norfolk Southern and CanSino Biologics 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 Norfolk Southern and CanSino Biologics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Norfolk Southern and CanSino Biologics, you can compare the effects of market volatilities on Norfolk Southern and CanSino Biologics 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 Norfolk Southern with a short position of CanSino Biologics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Norfolk Southern and CanSino Biologics.

Diversification Opportunities for Norfolk Southern and CanSino Biologics

NorfolkCanSinoDiversified AwayNorfolkCanSinoDiversified Away100%
-0.15
  Correlation Coefficient

Good diversification

The 3 months correlation between Norfolk and CanSino is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Norfolk Southern and CanSino Biologics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CanSino Biologics and Norfolk Southern 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 Norfolk Southern are associated (or correlated) with CanSino Biologics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CanSino Biologics has no effect on the direction of Norfolk Southern i.e., Norfolk Southern and CanSino Biologics go up and down completely randomly.

Pair Corralation between Norfolk Southern and CanSino Biologics

Considering the 90-day investment horizon Norfolk Southern is expected to generate 0.52 times more return on investment than CanSino Biologics. However, Norfolk Southern is 1.92 times less risky than CanSino Biologics. It trades about 0.02 of its potential returns per unit of risk. CanSino Biologics is currently generating about 0.0 per unit of risk. If you would invest  25,222  in Norfolk Southern on October 26, 2024 and sell it today you would earn a total of  392.00  from holding Norfolk Southern or generate 1.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Norfolk Southern  vs.  CanSino Biologics

 Performance 
JavaScript chart by amCharts 3.21.15NovDec2025 -505101520
JavaScript chart by amCharts 3.21.15NSC CASBF
       Timeline  
Norfolk Southern 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Norfolk Southern are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Norfolk Southern is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan230240250260270
CanSino Biologics 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CanSino Biologics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, CanSino Biologics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan3.43.63.844.24.4

Norfolk Southern and CanSino Biologics Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-5.95-4.46-2.96-1.47-0.011.452.974.496.017.53 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15NSC CASBF
       Returns  

Pair Trading with Norfolk Southern and CanSino Biologics

The main advantage of trading using opposite Norfolk Southern and CanSino Biologics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Norfolk Southern position performs unexpectedly, CanSino Biologics 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 CanSino Biologics will offset losses from the drop in CanSino Biologics' long position.
The idea behind Norfolk Southern and CanSino Biologics 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.

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