Correlation Between Abak SA and NGG
Can any of the company-specific risk be diversified away by investing in both Abak SA and NGG 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 Abak SA and NGG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Abak SA and NGG, you can compare the effects of market volatilities on Abak SA and NGG 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 Abak SA with a short position of NGG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Abak SA and NGG.
Diversification Opportunities for Abak SA and NGG
Good diversification
The 3 months correlation between Abak and NGG is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Abak SA and NGG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGG and Abak SA 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 Abak SA are associated (or correlated) with NGG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGG has no effect on the direction of Abak SA i.e., Abak SA and NGG go up and down completely randomly.
Pair Corralation between Abak SA and NGG
Assuming the 90 days trading horizon Abak SA is expected to under-perform the NGG. But the stock apears to be less risky and, when comparing its historical volatility, Abak SA is 3.18 times less risky than NGG. The stock trades about -0.65 of its potential returns per unit of risk. The NGG is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3.30 in NGG on September 1, 2024 and sell it today you would earn a total of 0.08 from holding NGG or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 25.0% |
| Values | Daily Returns |
Abak SA vs. NGG
Performance |
| Timeline |
| Abak SA |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| NGG |
Abak SA and NGG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Abak SA and NGG
The main advantage of trading using opposite Abak SA and NGG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Abak SA position performs unexpectedly, NGG 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 NGG will offset losses from the drop in NGG's long position.The idea behind Abak SA and NGG 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.| NGG vs. Asseco Business Solutions | NGG vs. Detalion Games SA | NGG vs. Asseco South Eastern | NGG vs. CFI Holding SA |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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