Correlation Between NMI Holdings and STRAITS TRADG
Can any of the company-specific risk be diversified away by investing in both NMI Holdings and STRAITS TRADG 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 STRAITS TRADG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NMI Holdings and STRAITS TRADG SD, you can compare the effects of market volatilities on NMI Holdings and STRAITS TRADG 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 STRAITS TRADG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and STRAITS TRADG.
Diversification Opportunities for NMI Holdings and STRAITS TRADG
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between NMI and STRAITS is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and STRAITS TRADG SD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRAITS TRADG SD 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 STRAITS TRADG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRAITS TRADG SD has no effect on the direction of NMI Holdings i.e., NMI Holdings and STRAITS TRADG go up and down completely randomly.
Pair Corralation between NMI Holdings and STRAITS TRADG
Assuming the 90 days horizon NMI Holdings is expected to under-perform the STRAITS TRADG. But the stock apears to be less risky and, when comparing its historical volatility, NMI Holdings is 1.1 times less risky than STRAITS TRADG. The stock trades about -0.14 of its potential returns per unit of risk. The STRAITS TRADG SD is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 101.00 in STRAITS TRADG SD on October 12, 2024 and sell it today you would lose (2.00) from holding STRAITS TRADG SD or give up 1.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
NMI Holdings vs. STRAITS TRADG SD
Performance |
| Timeline |
| NMI Holdings |
| STRAITS TRADG SD |
NMI Holdings and STRAITS TRADG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NMI Holdings and STRAITS TRADG
The main advantage of trading using opposite NMI Holdings and STRAITS TRADG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NMI Holdings position performs unexpectedly, STRAITS TRADG 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 STRAITS TRADG will offset losses from the drop in STRAITS TRADG's long position.| NMI Holdings vs. ZhongAn Online P | NMI Holdings vs. Singapore Airlines Limited | NMI Holdings vs. PRECISION DRILLING P | NMI Holdings vs. CARSALESCOM |
| STRAITS TRADG vs. ADRIATIC METALS LS 013355 | STRAITS TRADG vs. Superior Plus Corp | STRAITS TRADG vs. NMI Holdings | STRAITS TRADG 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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