Correlation Between NAT ABSOLUTE and SAF Special
Can any of the company-specific risk be diversified away by investing in both NAT ABSOLUTE and SAF Special 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 NAT ABSOLUTE and SAF Special into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NAT ABSOLUTE TECHNOLOGIES and SAF Special Steel, you can compare the effects of market volatilities on NAT ABSOLUTE and SAF Special 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 NAT ABSOLUTE with a short position of SAF Special. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAT ABSOLUTE and SAF Special.
Diversification Opportunities for NAT ABSOLUTE and SAF Special
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NAT and SAF is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NAT ABSOLUTE TECHNOLOGIES and SAF Special Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAF Special Steel and NAT ABSOLUTE 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 NAT ABSOLUTE TECHNOLOGIES are associated (or correlated) with SAF Special. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAF Special Steel has no effect on the direction of NAT ABSOLUTE i.e., NAT ABSOLUTE and SAF Special go up and down completely randomly.
Pair Corralation between NAT ABSOLUTE and SAF Special
Assuming the 90 days trading horizon NAT ABSOLUTE TECHNOLOGIES is expected to generate 0.73 times more return on investment than SAF Special. However, NAT ABSOLUTE TECHNOLOGIES is 1.37 times less risky than SAF Special. It trades about -0.01 of its potential returns per unit of risk. SAF Special Steel is currently generating about -0.03 per unit of risk. If you would invest 492.00 in NAT ABSOLUTE TECHNOLOGIES on September 3, 2024 and sell it today you would lose (56.00) from holding NAT ABSOLUTE TECHNOLOGIES or give up 11.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NAT ABSOLUTE TECHNOLOGIES vs. SAF Special Steel
Performance |
| Timeline |
| NAT ABSOLUTE TECHNOLOGIES |
| SAF Special Steel |
NAT ABSOLUTE and SAF Special Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NAT ABSOLUTE and SAF Special
The main advantage of trading using opposite NAT ABSOLUTE and SAF Special positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NAT ABSOLUTE position performs unexpectedly, SAF Special 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 SAF Special will offset losses from the drop in SAF Special's long position.| NAT ABSOLUTE vs. Delta Electronics Public | NAT ABSOLUTE vs. Delta Electronics Public | NAT ABSOLUTE vs. Airports of Thailand | NAT ABSOLUTE vs. Airports of Thailand |
| SAF Special vs. Diamond Building Products | SAF Special vs. MCS Steel Public | SAF Special vs. Asia Green Energy | SAF Special vs. Hwa Fong Rubber |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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