Correlation Between Algorand and NGK Insulators
Can any of the company-specific risk be diversified away by investing in both Algorand and NGK Insulators 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 Algorand and NGK Insulators into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Algorand and NGK Insulators, you can compare the effects of market volatilities on Algorand and NGK Insulators 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 Algorand with a short position of NGK Insulators. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algorand and NGK Insulators.
Diversification Opportunities for Algorand and NGK Insulators
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Algorand and NGK is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and NGK Insulators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGK Insulators and Algorand 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 Algorand are associated (or correlated) with NGK Insulators. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NGK Insulators has no effect on the direction of Algorand i.e., Algorand and NGK Insulators go up and down completely randomly.
Pair Corralation between Algorand and NGK Insulators
Assuming the 90 days trading horizon Algorand is expected to generate 5.96 times more return on investment than NGK Insulators. However, Algorand is 5.96 times more volatile than NGK Insulators. It trades about 0.25 of its potential returns per unit of risk. NGK Insulators is currently generating about -0.16 per unit of risk. If you would invest 11.00 in Algorand on November 2, 2024 and sell it today you would earn a total of 28.00 from holding Algorand or generate 254.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.19% |
| Values | Daily Returns |
Algorand vs. NGK Insulators
Performance |
| Timeline |
| Algorand |
| NGK Insulators |
Algorand and NGK Insulators Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Algorand and NGK Insulators
The main advantage of trading using opposite Algorand and NGK Insulators positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algorand position performs unexpectedly, NGK Insulators 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 NGK Insulators will offset losses from the drop in NGK Insulators' long position.The idea behind Algorand and NGK Insulators 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.| NGK Insulators vs. HUTCHMED DRC | NGK Insulators vs. Xtant Medical Holdings | NGK Insulators vs. Cardinal Health | NGK Insulators vs. Reservoir Media |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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