Correlation Between NMI Holdings and CITIC
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and CITIC 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 CITIC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and CITIC LTD ADR5, you can compare the effects of market volatilities on NMI Holdings and CITIC 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 CITIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and CITIC.
Diversification Opportunities for NMI Holdings and CITIC
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between NMI and CITIC is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and CITIC LTD ADR5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CITIC LTD ADR5 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 CITIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CITIC LTD ADR5 has no effect on the direction of NMI Holdings i.e., NMI Holdings and CITIC go up and down completely randomly.
Pair Corralation between NMI Holdings and CITIC
Assuming the 90 days horizon NMI Holdings is expected to generate 1.07 times more return on investment than CITIC. However, NMI Holdings is 1.07 times more volatile than CITIC LTD ADR5. It trades about 0.04 of its potential returns per unit of risk. CITIC LTD ADR5 is currently generating about -0.11 per unit of risk. If you would invest 3,580 in NMI Holdings on August 29, 2024 and sell it today you would earn a total of 60.00 from holding NMI Holdings or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. CITIC LTD ADR5
Performance |
| Timeline |
| NMI Holdings |
| CITIC LTD ADR5 |
NMI Holdings and CITIC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and CITIC
The main advantage of trading using opposite NMI Holdings and CITIC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, CITIC 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 CITIC will offset losses from the drop in CITIC's long position.| NMI Holdings vs. CSSC Offshore Marine | NMI Holdings vs. SIEM OFFSHORE NEW | NMI Holdings vs. PARKEN Sport Entertainment | NMI Holdings vs. SK TELECOM TDADR |
| CITIC vs. Superior Plus Corp | CITIC vs. NMI Holdings | CITIC vs. Origin Agritech | CITIC vs. SIVERS SEMICONDUCTORS AB |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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