Correlation Between Nine Dragons and Holmen AB

Can any of the company-specific risk be diversified away by investing in both Nine Dragons and Holmen AB 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 Nine Dragons and Holmen AB into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nine Dragons Paper and Holmen AB ADR, you can compare the effects of market volatilities on Nine Dragons and Holmen AB 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 Nine Dragons with a short position of Holmen AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nine Dragons and Holmen AB.

Diversification Opportunities for Nine Dragons and Holmen AB

0.0

Correlation Coefficient

Nine Dragons  Holmen AB

Pay attention - limited upside

The 3 months correlation between Nine and Holmen is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Nine Dragons Paper and Holmen AB ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Holmen AB ADR and Nine Dragons 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 Nine Dragons Paper are associated (or correlated) with Holmen AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Holmen AB ADR has no effect on the direction of Nine Dragons i.e., Nine Dragons and Holmen AB go up and down completely randomly.

Pair Corralation between Nine Dragons and Holmen AB

If you would invest  37.00  in Nine Dragons Paper on September 16, 2024 and sell it today you would earn a total of  3.00  from holding Nine Dragons Paper or generate 8.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Nine Dragons Paper  vs.  Holmen AB ADR

Nine Dragons Paper

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nine Dragons Paper are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nine Dragons reported solid returns over the last few months and may actually be approaching a breakup point.

Holmen AB ADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Holmen AB ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Holmen AB is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nine Dragons and Holmen AB

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

The idea behind Nine Dragons Paper and Holmen AB ADR 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.