Correlation Between N Citron and Signetics
Can any of the company-specific risk be diversified away by investing in both N Citron and Signetics 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 N Citron and Signetics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between N Citron and Signetics, you can compare the effects of market volatilities on N Citron and Signetics 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 N Citron with a short position of Signetics. Check out your portfolio center. Please also check ongoing floating volatility patterns of N Citron and Signetics.
Diversification Opportunities for N Citron and Signetics
Poor diversification
The 3 months correlation between 101400 and Signetics is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding N Citron and Signetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Signetics and N Citron 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 N Citron are associated (or correlated) with Signetics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Signetics has no effect on the direction of N Citron i.e., N Citron and Signetics go up and down completely randomly.
Pair Corralation between N Citron and Signetics
Assuming the 90 days trading horizon N Citron is expected to generate 0.78 times more return on investment than Signetics. However, N Citron is 1.28 times less risky than Signetics. It trades about -0.14 of its potential returns per unit of risk. Signetics is currently generating about -0.37 per unit of risk. If you would invest 42,700 in N Citron on August 29, 2024 and sell it today you would lose (2,200) from holding N Citron or give up 5.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
N Citron vs. Signetics
Performance |
| Timeline |
| N Citron |
| Signetics |
N Citron and Signetics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with N Citron and Signetics
The main advantage of trading using opposite N Citron and Signetics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if N Citron position performs unexpectedly, Signetics 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 Signetics will offset losses from the drop in Signetics' long position.| N Citron vs. Daou Data Corp | N Citron vs. Busan Industrial Co | N Citron vs. Busan Ind | N Citron vs. Shinhan WTI Futures |
| Signetics vs. Histeel | Signetics vs. Daechang Steel Co | Signetics vs. Dongbu Steel Co | Signetics vs. Fine Besteel Co |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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