Correlation Between NMI Holdings and Sinotruk
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Sinotruk 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 NMI Holdings and Sinotruk into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Sinotruk Limited, you can compare the effects of market volatilities on NMI Holdings and Sinotruk 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 NMI Holdings with a short position of Sinotruk. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Sinotruk.
Diversification Opportunities for NMI Holdings and Sinotruk
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between NMI and Sinotruk is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Sinotruk Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sinotruk Limited and NMI Holdings 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 NMI Holdings are associated (or correlated) with Sinotruk. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sinotruk Limited has no effect on the direction of NMI Holdings i.e., NMI Holdings and Sinotruk go up and down completely randomly.
Pair Corralation between NMI Holdings and Sinotruk
Assuming the 90 days horizon NMI Holdings is expected to generate 3.47 times less return on investment than Sinotruk. But when comparing it to its historical volatility, NMI Holdings is 2.82 times less risky than Sinotruk. It trades about 0.06 of its potential returns per unit of risk. Sinotruk Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 72.00 in Sinotruk Limited on November 19, 2024 and sell it today you would earn a total of 192.00 from holding Sinotruk Limited or generate 266.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Sinotruk Limited
Performance |
| Timeline |
| NMI Holdings |
| Sinotruk Limited |
NMI Holdings and Sinotruk Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Sinotruk
The main advantage of trading using opposite NMI Holdings and Sinotruk positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Sinotruk 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 Sinotruk will offset losses from the drop in Sinotruk's long position.| NMI Holdings vs. Singapore Airlines Limited | NMI Holdings vs. QBE Insurance Group | NMI Holdings vs. Vienna Insurance Group | NMI Holdings vs. PANIN INSURANCE |
| Sinotruk vs. Zijin Mining Group | Sinotruk vs. CORNISH METALS INC | Sinotruk vs. Japan Asia Investment | Sinotruk vs. ARDAGH METAL PACDL 0001 |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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