Correlation Between North East and NCL International
Can any of the company-specific risk be diversified away by investing in both North East and NCL International 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 North East and NCL International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between North East Rubbers and NCL International Logistics, you can compare the effects of market volatilities on North East and NCL International 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 North East with a short position of NCL International. Check out your portfolio center. Please also check ongoing floating volatility patterns of North East and NCL International.
Diversification Opportunities for North East and NCL International
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between North and NCL is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding North East Rubbers and NCL International Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCL International and North East 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 North East Rubbers are associated (or correlated) with NCL International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCL International has no effect on the direction of North East i.e., North East and NCL International go up and down completely randomly.
Pair Corralation between North East and NCL International
Assuming the 90 days trading horizon North East Rubbers is expected to generate 0.4 times more return on investment than NCL International. However, North East Rubbers is 2.51 times less risky than NCL International. It trades about -0.16 of its potential returns per unit of risk. NCL International Logistics is currently generating about -0.2 per unit of risk. If you would invest 540.00 in North East Rubbers on August 28, 2024 and sell it today you would lose (62.00) from holding North East Rubbers or give up 11.48% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
North East Rubbers vs. NCL International Logistics
Performance |
| Timeline |
| North East Rubbers |
| NCL International |
North East and NCL International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with North East and NCL International
The main advantage of trading using opposite North East and NCL International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if North East position performs unexpectedly, NCL International 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 NCL International will offset losses from the drop in NCL International's long position.| North East vs. NCL International Logistics | North East vs. The Erawan Group | North East vs. Airports of Thailand | North East vs. Eastern Technical Engineering |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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