Correlation Between National Research and Etao International
Can any of the company-specific risk be diversified away by investing in both National Research and Etao 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 National Research and Etao International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Research Corp and Etao International Co,, you can compare the effects of market volatilities on National Research and Etao 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 National Research with a short position of Etao International. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Research and Etao International.
Diversification Opportunities for National Research and Etao International
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Etao is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding National Research Corp and Etao International Co, in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Etao International Co, and National Research 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 National Research Corp are associated (or correlated) with Etao International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Etao International Co, has no effect on the direction of National Research i.e., National Research and Etao International go up and down completely randomly.
Pair Corralation between National Research and Etao International
Considering the 90-day investment horizon National Research Corp is expected to under-perform the Etao International. But the stock apears to be less risky and, when comparing its historical volatility, National Research Corp is 24.51 times less risky than Etao International. The stock trades about -0.05 of its potential returns per unit of risk. The Etao International Co, is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 20,160 in Etao International Co, on August 29, 2024 and sell it today you would lose (20,155) from holding Etao International Co, or give up 99.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 80.44% |
| Values | Daily Returns |
National Research Corp vs. Etao International Co,
Performance |
| Timeline |
| National Research Corp |
| Etao International Co, |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
National Research and Etao International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Research and Etao International
The main advantage of trading using opposite National Research and Etao International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Research position performs unexpectedly, Etao 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 Etao International will offset losses from the drop in Etao International's long position.| National Research vs. Omega Flex | National Research vs. NI Holdings | National Research vs. PC Connection | National Research vs. Northrim BanCorp |
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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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