Correlation Between NEM INSURANCE and INDUSTRIAL MEDICAL
Can any of the company-specific risk be diversified away by investing in both NEM INSURANCE and INDUSTRIAL MEDICAL 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 NEM INSURANCE and INDUSTRIAL MEDICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEM INSURANCE PLC and INDUSTRIAL MEDICAL GASES, you can compare the effects of market volatilities on NEM INSURANCE and INDUSTRIAL MEDICAL 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 NEM INSURANCE with a short position of INDUSTRIAL MEDICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEM INSURANCE and INDUSTRIAL MEDICAL.
Diversification Opportunities for NEM INSURANCE and INDUSTRIAL MEDICAL
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between NEM and INDUSTRIAL is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding NEM INSURANCE PLC and INDUSTRIAL MEDICAL GASES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INDUSTRIAL MEDICAL GASES and NEM INSURANCE 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 NEM INSURANCE PLC are associated (or correlated) with INDUSTRIAL MEDICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INDUSTRIAL MEDICAL GASES has no effect on the direction of NEM INSURANCE i.e., NEM INSURANCE and INDUSTRIAL MEDICAL go up and down completely randomly.
Pair Corralation between NEM INSURANCE and INDUSTRIAL MEDICAL
Assuming the 90 days trading horizon NEM INSURANCE is expected to generate 1.54 times less return on investment than INDUSTRIAL MEDICAL. In addition to that, NEM INSURANCE is 1.53 times more volatile than INDUSTRIAL MEDICAL GASES. It trades about 0.07 of its total potential returns per unit of risk. INDUSTRIAL MEDICAL GASES is currently generating about 0.16 per unit of volatility. If you would invest 680.00 in INDUSTRIAL MEDICAL GASES on September 12, 2024 and sell it today you would earn a total of 3,115 from holding INDUSTRIAL MEDICAL GASES or generate 458.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 97.11% |
| Values | Daily Returns |
NEM INSURANCE PLC vs. INDUSTRIAL MEDICAL GASES
Performance |
| Timeline |
| NEM INSURANCE PLC |
| INDUSTRIAL MEDICAL GASES |
NEM INSURANCE and INDUSTRIAL MEDICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEM INSURANCE and INDUSTRIAL MEDICAL
The main advantage of trading using opposite NEM INSURANCE and INDUSTRIAL MEDICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEM INSURANCE position performs unexpectedly, INDUSTRIAL MEDICAL 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 INDUSTRIAL MEDICAL will offset losses from the drop in INDUSTRIAL MEDICAL's long position.| NEM INSURANCE vs. GUINEA INSURANCE PLC | NEM INSURANCE vs. SECURE ELECTRONIC TECHNOLOGY | NEM INSURANCE vs. VFD GROUP | NEM INSURANCE vs. IKEJA HOTELS PLC |
| INDUSTRIAL MEDICAL vs. VETIVA SUMER GOODS | INDUSTRIAL MEDICAL vs. CUSTODIAN INVESTMENT PLC | INDUSTRIAL MEDICAL vs. STANDARD ALLIANCE INSURANCE | INDUSTRIAL MEDICAL vs. NEM INSURANCE PLC |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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