Correlation Between National Bank and Nimir Industrial
Can any of the company-specific risk be diversified away by investing in both National Bank and Nimir Industrial 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 Nimir Industrial 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 Nimir Industrial Chemical, you can compare the effects of market volatilities on National Bank and Nimir Industrial 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 Nimir Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Nimir Industrial.
Diversification Opportunities for National Bank and Nimir Industrial
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between National and Nimir is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Nimir Industrial Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nimir Industrial Chemical 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 Nimir Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nimir Industrial Chemical has no effect on the direction of National Bank i.e., National Bank and Nimir Industrial go up and down completely randomly.
Pair Corralation between National Bank and Nimir Industrial
Assuming the 90 days trading horizon National Bank of is expected to generate 0.73 times more return on investment than Nimir Industrial. However, National Bank of is 1.38 times less risky than Nimir Industrial. It trades about 0.1 of its potential returns per unit of risk. Nimir Industrial Chemical is currently generating about 0.07 per unit of risk. If you would invest 2,458 in National Bank of on August 27, 2024 and sell it today you would earn a total of 3,893 from holding National Bank of or generate 158.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 86.39% |
| Values | Daily Returns |
National Bank of vs. Nimir Industrial Chemical
Performance |
| Timeline |
| National Bank |
| Nimir Industrial Chemical |
National Bank and Nimir Industrial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Bank and Nimir Industrial
The main advantage of trading using opposite National Bank and Nimir Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Nimir Industrial 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 Nimir Industrial will offset losses from the drop in Nimir Industrial's long position.| National Bank vs. Big Bird Foods | National Bank vs. Amreli Steels | National Bank vs. Crescent Steel Allied | National Bank vs. Ghandhara Automobile |
| Nimir Industrial vs. Unilever Pakistan Foods | Nimir Industrial vs. Hi Tech Lubricants | Nimir Industrial vs. Crescent Star Insurance | Nimir Industrial vs. Honda Atlas Cars |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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