Correlation Between China Natural and Aduro Clean
Can any of the company-specific risk be diversified away by investing in both China Natural and Aduro Clean 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 China Natural and Aduro Clean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Natural Resources and Aduro Clean Technologies, you can compare the effects of market volatilities on China Natural and Aduro Clean 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 China Natural with a short position of Aduro Clean. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Natural and Aduro Clean.
Diversification Opportunities for China Natural and Aduro Clean
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between China and Aduro is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding China Natural Resources and Aduro Clean Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aduro Clean Technologies and China Natural 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 China Natural Resources are associated (or correlated) with Aduro Clean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aduro Clean Technologies has no effect on the direction of China Natural i.e., China Natural and Aduro Clean go up and down completely randomly.
Pair Corralation between China Natural and Aduro Clean
Given the investment horizon of 90 days China Natural is expected to generate 4.76 times less return on investment than Aduro Clean. In addition to that, China Natural is 2.07 times more volatile than Aduro Clean Technologies. It trades about 0.01 of its total potential returns per unit of risk. Aduro Clean Technologies is currently generating about 0.07 per unit of volatility. If you would invest 476.00 in Aduro Clean Technologies on September 25, 2024 and sell it today you would earn a total of 70.00 from holding Aduro Clean Technologies or generate 14.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
China Natural Resources vs. Aduro Clean Technologies
Performance |
Timeline |
China Natural Resources |
Aduro Clean Technologies |
China Natural and Aduro Clean Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with China Natural and Aduro Clean
The main advantage of trading using opposite China Natural and Aduro Clean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Natural position performs unexpectedly, Aduro Clean 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 Aduro Clean will offset losses from the drop in Aduro Clean's long position.China Natural vs. Seychelle Environmtl | China Natural vs. Vow ASA | China Natural vs. Eestech | China Natural vs. Energy and Water |
Aduro Clean vs. Aker Carbon Capture | Aduro Clean vs. TOMI Environmental Solutions | Aduro Clean vs. Zurn Elkay Water | Aduro Clean vs. Federal Signal |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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