Correlation Between National Bank and Beco Steel
Can any of the company-specific risk be diversified away by investing in both National Bank and Beco Steel 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 National Bank and Beco Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Bank of and Beco Steel, you can compare the effects of market volatilities on National Bank and Beco Steel 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 National Bank with a short position of Beco Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Beco Steel.
Diversification Opportunities for National Bank and Beco Steel
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between National and Beco is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Beco Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beco Steel and National Bank 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 National Bank of are associated (or correlated) with Beco Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beco Steel has no effect on the direction of National Bank i.e., National Bank and Beco Steel go up and down completely randomly.
Pair Corralation between National Bank and Beco Steel
Assuming the 90 days trading horizon National Bank of is expected to generate 0.85 times more return on investment than Beco Steel. However, National Bank of is 1.17 times less risky than Beco Steel. It trades about 0.17 of its potential returns per unit of risk. Beco Steel is currently generating about 0.0 per unit of risk. If you would invest 6,000 in National Bank of on August 30, 2024 and sell it today you would earn a total of 1,232 from holding National Bank of or generate 20.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Bank of vs. Beco Steel
Performance |
| Timeline |
| National Bank |
| Beco Steel |
National Bank and Beco Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Beco Steel
The main advantage of trading using opposite National Bank and Beco Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Beco Steel 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 Beco Steel will offset losses from the drop in Beco Steel's long position.| National Bank vs. Pakistan Synthetics | National Bank vs. Silkbank | National Bank vs. Big Bird Foods | National Bank vs. Ghani Chemical Industries |
| Beco Steel vs. Habib Insurance | Beco Steel vs. Century Insurance | Beco Steel vs. Reliance Weaving Mills | Beco Steel vs. Media Times |
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.
Other Complementary Tools
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency |