Correlation Between NMI Holdings and Penta-Ocean Construction
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and Penta-Ocean Construction 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 Penta-Ocean Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and Penta Ocean Construction Co, you can compare the effects of market volatilities on NMI Holdings and Penta-Ocean Construction 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 Penta-Ocean Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and Penta-Ocean Construction.
Diversification Opportunities for NMI Holdings and Penta-Ocean Construction
-0.58 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NMI and Penta-Ocean is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Penta Ocean Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penta-Ocean Construction 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 Penta-Ocean Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penta-Ocean Construction has no effect on the direction of NMI Holdings i.e., NMI Holdings and Penta-Ocean Construction go up and down completely randomly.
Pair Corralation between NMI Holdings and Penta-Ocean Construction
Assuming the 90 days horizon NMI Holdings is expected to generate 0.94 times more return on investment than Penta-Ocean Construction. However, NMI Holdings is 1.06 times less risky than Penta-Ocean Construction. It trades about 0.06 of its potential returns per unit of risk. Penta Ocean Construction Co is currently generating about 0.0 per unit of risk. If you would invest 2,240 in NMI Holdings on November 27, 2024 and sell it today you would earn a total of 1,080 from holding NMI Holdings or generate 48.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NMI Holdings vs. Penta Ocean Construction Co
Performance |
| Timeline |
| NMI Holdings |
| Penta-Ocean Construction |
NMI Holdings and Penta-Ocean Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and Penta-Ocean Construction
The main advantage of trading using opposite NMI Holdings and Penta-Ocean Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, Penta-Ocean Construction 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 Penta-Ocean Construction will offset losses from the drop in Penta-Ocean Construction's long position.| NMI Holdings vs. China Southern Airlines | NMI Holdings vs. Gol Intelligent Airlines | NMI Holdings vs. International Consolidated Airlines | NMI Holdings vs. CARSALESCOM |
| Penta-Ocean Construction vs. CN MODERN DAIRY | Penta-Ocean Construction vs. BOVIS HOMES GROUP | Penta-Ocean Construction vs. American Homes 4 | Penta-Ocean Construction vs. Collins Foods Limited |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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