Correlation Between A2Z Smart and China Natural

Can any of the company-specific risk be diversified away by investing in both A2Z Smart and China Natural 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 A2Z Smart and China Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between A2Z Smart Technologies and China Natural Resources, you can compare the effects of market volatilities on A2Z Smart and China Natural 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 A2Z Smart with a short position of China Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of A2Z Smart and China Natural.

Diversification Opportunities for A2Z Smart and China Natural

-0.68

Correlation Coefficient

A2Z Smart  China Natural

Excellent diversification

The 3 months correlation between A2Z and China is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding A2Z Smart Technologies and China Natural Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Natural Resources and A2Z Smart 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 A2Z Smart Technologies are associated (or correlated) with China Natural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Natural Resources has no effect on the direction of A2Z Smart i.e., A2Z Smart and China Natural go up and down completely randomly.

Pair Corralation between A2Z Smart and China Natural

Allowing for the 90-day total investment horizon A2Z Smart Technologies is expected to generate 0.56 times more return on investment than China Natural. However, A2Z Smart Technologies is 1.79 times less risky than China Natural. It trades about 0.06 of its potential returns per unit of risk. China Natural Resources is currently generating about 0.02 per unit of risk. If you would invest  325.00  in A2Z Smart Technologies on September 25, 2024 and sell it today you would earn a total of  390.00  from holding A2Z Smart Technologies or generate 120.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.6%
Values	Daily Returns

A2Z Smart Technologies  vs.  China Natural Resources

A2Z Smart Technologies

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in A2Z Smart Technologies are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, A2Z Smart showed solid returns over the last few months and may actually be approaching a breakup point.

China Natural Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days China Natural Resources has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, China Natural is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with A2Z Smart and China Natural

The main advantage of trading using opposite A2Z Smart and China Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A2Z Smart position performs unexpectedly, China Natural 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 Natural will offset losses from the drop in China Natural's long position.

The idea behind A2Z Smart Technologies and China Natural Resources 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.