Correlation Between NN and Agro Capital
Can any of the company-specific risk be diversified away by investing in both NN and Agro Capital 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 NN and Agro Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NN Inc and Agro Capital Management, you can compare the effects of market volatilities on NN and Agro Capital 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 NN with a short position of Agro Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of NN and Agro Capital.
Diversification Opportunities for NN and Agro Capital
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NN and Agro is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding NN Inc and Agro Capital Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agro Capital Management and NN 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 NN Inc are associated (or correlated) with Agro Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agro Capital Management has no effect on the direction of NN i.e., NN and Agro Capital go up and down completely randomly.
Pair Corralation between NN and Agro Capital
Given the investment horizon of 90 days NN is expected to generate 40.16 times less return on investment than Agro Capital. But when comparing it to its historical volatility, NN Inc is 5.86 times less risky than Agro Capital. It trades about 0.03 of its potential returns per unit of risk. Agro Capital Management is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 1.70 in Agro Capital Management on August 31, 2024 and sell it today you would earn a total of 0.53 from holding Agro Capital Management or generate 31.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NN Inc vs. Agro Capital Management
Performance |
| Timeline |
| NN Inc |
| Agro Capital Management |
NN and Agro Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NN and Agro Capital
The main advantage of trading using opposite NN and Agro Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NN position performs unexpectedly, Agro Capital 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 Agro Capital will offset losses from the drop in Agro Capital's long position.| NN vs. Steel Partners Holdings | NN vs. Compass Diversified | NN vs. Brookfield Business Partners | NN vs. Matthews International |
| Agro Capital vs. Sumitomo Corp ADR | Agro Capital vs. Itochu Corp ADR | Agro Capital vs. ITOCHU | Agro Capital vs. Marubeni Corp ADR |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
Other Complementary Tools
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Efficient Frontier Plot and analyze your portfolio and positions against risk-return landscape of the market. | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Commodity Directory Find actively traded commodities issued by global exchanges |