Correlation Between Biokarpet and Nafpaktos Textile

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Can any of the company-specific risk be diversified away by investing in both Biokarpet and Nafpaktos Textile 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 Biokarpet and Nafpaktos Textile into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Biokarpet SA and Nafpaktos Textile Industry, you can compare the effects of market volatilities on Biokarpet and Nafpaktos Textile 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 Biokarpet with a short position of Nafpaktos Textile. Check out your portfolio center. Please also check ongoing floating volatility patterns of Biokarpet and Nafpaktos Textile.

Diversification Opportunities for Biokarpet and Nafpaktos Textile

0.03
  Correlation Coefficient

Significant diversification

The 3 months correlation between Biokarpet and Nafpaktos is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Biokarpet SA and Nafpaktos Textile Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nafpaktos Textile and Biokarpet 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 Biokarpet SA are associated (or correlated) with Nafpaktos Textile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nafpaktos Textile has no effect on the direction of Biokarpet i.e., Biokarpet and Nafpaktos Textile go up and down completely randomly.

Pair Corralation between Biokarpet and Nafpaktos Textile

Assuming the 90 days trading horizon Biokarpet SA is expected to generate 0.94 times more return on investment than Nafpaktos Textile. However, Biokarpet SA is 1.06 times less risky than Nafpaktos Textile. It trades about 0.03 of its potential returns per unit of risk. Nafpaktos Textile Industry is currently generating about -0.01 per unit of risk. If you would invest  156.00  in Biokarpet SA on September 26, 2024 and sell it today you would earn a total of  33.00  from holding Biokarpet SA or generate 21.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Biokarpet SA  vs.  Nafpaktos Textile Industry

 Performance 
       Timeline  
Biokarpet SA 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Biokarpet SA are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Biokarpet is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Nafpaktos Textile 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Nafpaktos Textile Industry are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Nafpaktos Textile may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Biokarpet and Nafpaktos Textile Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Biokarpet and Nafpaktos Textile

The main advantage of trading using opposite Biokarpet and Nafpaktos Textile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Biokarpet position performs unexpectedly, Nafpaktos Textile 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 Nafpaktos Textile will offset losses from the drop in Nafpaktos Textile's long position.
The idea behind Biokarpet SA and Nafpaktos Textile Industry 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.
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.

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