Correlation Between NCL International and Airports
Can any of the company-specific risk be diversified away by investing in both NCL International and Airports 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 NCL International and Airports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NCL International Logistics and Airports of Thailand, you can compare the effects of market volatilities on NCL International and Airports 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 NCL International with a short position of Airports. Check out your portfolio center. Please also check ongoing floating volatility patterns of NCL International and Airports.
Diversification Opportunities for NCL International and Airports
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NCL and Airports is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NCL International Logistics and Airports of Thailand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airports of Thailand and NCL International 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 NCL International Logistics are associated (or correlated) with Airports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airports of Thailand has no effect on the direction of NCL International i.e., NCL International and Airports go up and down completely randomly.
Pair Corralation between NCL International and Airports
Assuming the 90 days trading horizon NCL International Logistics is expected to generate 45.75 times more return on investment than Airports. However, NCL International is 45.75 times more volatile than Airports of Thailand. It trades about 0.04 of its potential returns per unit of risk. Airports of Thailand is currently generating about -0.03 per unit of risk. If you would invest 216.00 in NCL International Logistics on August 28, 2024 and sell it today you would lose (174.00) from holding NCL International Logistics or give up 80.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NCL International Logistics vs. Airports of Thailand
Performance |
| Timeline |
| NCL International |
| Airports of Thailand |
NCL International and Airports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NCL International and Airports
The main advantage of trading using opposite NCL International and Airports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NCL International position performs unexpectedly, Airports 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 Airports will offset losses from the drop in Airports' long position.| NCL International vs. Kingsmen CMTI Public | NCL International vs. Masterkool International Public | NCL International vs. News Network | NCL International vs. Internet Thailand Public |
| Airports vs. Tata Steel Public | Airports vs. Thaifoods Group Public | Airports vs. TMT Steel Public | Airports vs. The Erawan Group |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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