Correlation Between Eastern Technical and NCL International
Can any of the company-specific risk be diversified away by investing in both Eastern Technical and NCL International 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 Eastern Technical and NCL International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastern Technical Engineering and NCL International Logistics, you can compare the effects of market volatilities on Eastern Technical and NCL International 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 Eastern Technical with a short position of NCL International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastern Technical and NCL International.
Diversification Opportunities for Eastern Technical and NCL International
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Eastern and NCL is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Eastern Technical Engineering and NCL International Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCL International and Eastern Technical 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 Eastern Technical Engineering are associated (or correlated) with NCL International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCL International has no effect on the direction of Eastern Technical i.e., Eastern Technical and NCL International go up and down completely randomly.
Pair Corralation between Eastern Technical and NCL International
Assuming the 90 days trading horizon Eastern Technical Engineering is expected to generate 0.99 times more return on investment than NCL International. However, Eastern Technical Engineering is 1.01 times less risky than NCL International. It trades about 0.05 of its potential returns per unit of risk. NCL International Logistics is currently generating about 0.04 per unit of risk. If you would invest 85.00 in Eastern Technical Engineering on August 28, 2024 and sell it today you would earn a total of 9.00 from holding Eastern Technical Engineering or generate 10.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Eastern Technical Engineering vs. NCL International Logistics
Performance |
| Timeline |
| Eastern Technical |
| NCL International |
Eastern Technical and NCL International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastern Technical and NCL International
The main advantage of trading using opposite Eastern Technical and NCL International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastern Technical position performs unexpectedly, NCL International 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 NCL International will offset losses from the drop in NCL International's long position.| Eastern Technical vs. G Capital Public | Eastern Technical vs. Harn Engineering Solutions | Eastern Technical vs. Fortune Parts Industry | Eastern Technical vs. Hydrotek Public |
| NCL International vs. Kingsmen CMTI Public | NCL International vs. Masterkool International Public | NCL International vs. News Network | NCL International vs. Internet Thailand Public |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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