Correlation Between CO2 Solutions and China Natural

Can any of the company-specific risk be diversified away by investing in both CO2 Solutions 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 CO2 Solutions and China Natural into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CO2 Solutions and China Natural Resources, you can compare the effects of market volatilities on CO2 Solutions 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 CO2 Solutions with a short position of China Natural. Check out your portfolio center. Please also check ongoing floating volatility patterns of CO2 Solutions and China Natural.

Diversification Opportunities for CO2 Solutions and China Natural

0.0

Correlation Coefficient

CO2 Solutions  China Natural

Pay attention - limited upside

The 3 months correlation between CO2 and China is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding CO2 Solutions 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 CO2 Solutions 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 CO2 Solutions 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 CO2 Solutions i.e., CO2 Solutions and China Natural go up and down completely randomly.

Pair Corralation between CO2 Solutions and China Natural

If you would invest  61.00  in China Natural Resources on September 21, 2024 and sell it today you would lose (5.00) from holding China Natural Resources or give up 8.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

CO2 Solutions  vs.  China Natural Resources

CO2 Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CO2 Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, CO2 Solutions is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

China Natural Resources

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in China Natural Resources are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, China Natural may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CO2 Solutions and China Natural

The main advantage of trading using opposite CO2 Solutions and China Natural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CO2 Solutions 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 CO2 Solutions 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.