Correlation Between NMI Holdings and Hapag-Lloyd

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Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Hapag-Lloyd 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 Hapag-Lloyd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Hapag Lloyd AG, you can compare the effects of market volatilities on NMI Holdings and Hapag-Lloyd 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 Hapag-Lloyd. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Hapag-Lloyd.

Diversification Opportunities for NMI Holdings and Hapag-Lloyd

-0.38
  Correlation Coefficient

Very good diversification

The 3 months correlation between NMI and Hapag-Lloyd is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Hapag Lloyd AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hapag Lloyd AG 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 Hapag-Lloyd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hapag Lloyd AG has no effect on the direction of NMI Holdings i.e., NMI Holdings and Hapag-Lloyd go up and down completely randomly.

Pair Corralation between NMI Holdings and Hapag-Lloyd

Assuming the 90 days horizon NMI Holdings is expected to generate 0.64 times more return on investment than Hapag-Lloyd. However, NMI Holdings is 1.57 times less risky than Hapag-Lloyd. It trades about 0.27 of its potential returns per unit of risk. Hapag Lloyd AG is currently generating about -0.12 per unit of risk. If you would invest  3,360  in NMI Holdings on September 3, 2024 and sell it today you would earn a total of  400.00  from holding NMI Holdings or generate 11.9% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

NMI Holdings  vs.  Hapag Lloyd AG

 Performance 
       Timeline  
NMI Holdings 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in NMI Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NMI Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.
Hapag Lloyd AG 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Hapag Lloyd AG are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Hapag-Lloyd may actually be approaching a critical reversion point that can send shares even higher in January 2025.

NMI Holdings and Hapag-Lloyd Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NMI Holdings and Hapag-Lloyd

The main advantage of trading using opposite NMI Holdings and Hapag-Lloyd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Hapag-Lloyd 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 Hapag-Lloyd will offset losses from the drop in Hapag-Lloyd's long position.
The idea behind NMI Holdings and Hapag Lloyd AG 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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