Correlation Between NCL International and Eastern Technical
Can any of the company-specific risk be diversified away by investing in both NCL International and Eastern Technical 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 Eastern Technical 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 Eastern Technical Engineering, you can compare the effects of market volatilities on NCL International and Eastern Technical 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 Eastern Technical. Check out your portfolio center. Please also check ongoing floating volatility patterns of NCL International and Eastern Technical.
Diversification Opportunities for NCL International and Eastern Technical
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NCL and Eastern is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding NCL International Logistics and Eastern Technical Engineering in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastern Technical 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 Eastern Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastern Technical has no effect on the direction of NCL International i.e., NCL International and Eastern Technical go up and down completely randomly.
Pair Corralation between NCL International and Eastern Technical
Assuming the 90 days trading horizon NCL International is expected to generate 1.17 times less return on investment than Eastern Technical. In addition to that, NCL International is 1.01 times more volatile than Eastern Technical Engineering. It trades about 0.04 of its total potential returns per unit of risk. Eastern Technical Engineering is currently generating about 0.05 per unit of volatility. 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 |
NCL International Logistics vs. Eastern Technical Engineering
Performance |
| Timeline |
| NCL International |
| Eastern Technical |
NCL International and Eastern Technical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NCL International and Eastern Technical
The main advantage of trading using opposite NCL International and Eastern Technical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NCL International position performs unexpectedly, Eastern Technical 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 Eastern Technical will offset losses from the drop in Eastern Technical's 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 |
| Eastern Technical vs. G Capital Public | Eastern Technical vs. Harn Engineering Solutions | Eastern Technical vs. Fortune Parts Industry | Eastern Technical vs. Hydrotek 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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