Correlation Between Aquagold International and NGK Insulators
Can any of the company-specific risk be diversified away by investing in both Aquagold International 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 Aquagold International and NGK Insulators into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aquagold International and NGK Insulators, you can compare the effects of market volatilities on Aquagold International 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 Aquagold International with a short position of NGK Insulators. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aquagold International and NGK Insulators.
Diversification Opportunities for Aquagold International and NGK Insulators
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Aquagold and NGK is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Aquagold International and NGK Insulators in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NGK Insulators and Aquagold International 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 Aquagold International 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 Aquagold International i.e., Aquagold International and NGK Insulators go up and down completely randomly.
Pair Corralation between Aquagold International and NGK Insulators
Given the investment horizon of 90 days Aquagold International is expected to under-perform the NGK Insulators. In addition to that, Aquagold International is 15.17 times more volatile than NGK Insulators. It trades about -0.22 of its total potential returns per unit of risk. NGK Insulators is currently generating about -0.08 per unit of volatility. If you would invest 1,290 in NGK Insulators on October 20, 2024 and sell it today you would lose (30.00) from holding NGK Insulators or give up 2.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Aquagold International vs. NGK Insulators
Performance |
| Timeline |
| Aquagold International |
| NGK Insulators |
Aquagold International and NGK Insulators Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aquagold International and NGK Insulators
The main advantage of trading using opposite Aquagold International and NGK Insulators positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aquagold International 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.| Aquagold International vs. PepsiCo | Aquagold International vs. Coca Cola Consolidated | Aquagold International vs. Monster Beverage Corp | Aquagold International vs. Celsius Holdings |
| NGK Insulators vs. Scandinavian Tobacco Group | NGK Insulators vs. Axalta Coating Systems | NGK Insulators vs. Philip Morris International | NGK Insulators vs. Westrock Coffee |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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