Correlation Between Premier Insurance and Nimir Industrial

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Can any of the company-specific risk be diversified away by investing in both Premier Insurance and Nimir Industrial 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 Premier Insurance and Nimir Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Premier Insurance and Nimir Industrial Chemical, you can compare the effects of market volatilities on Premier Insurance and Nimir Industrial 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 Premier Insurance with a short position of Nimir Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Premier Insurance and Nimir Industrial.

Diversification Opportunities for Premier Insurance and Nimir Industrial

PremierNimirDiversified AwayPremierNimirDiversified Away100%
-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between Premier and Nimir is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Premier Insurance and Nimir Industrial Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nimir Industrial Chemical and Premier 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 Premier Insurance are associated (or correlated) with Nimir Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nimir Industrial Chemical has no effect on the direction of Premier Insurance i.e., Premier Insurance and Nimir Industrial go up and down completely randomly.

Pair Corralation between Premier Insurance and Nimir Industrial

Assuming the 90 days trading horizon Premier Insurance is expected to under-perform the Nimir Industrial. In addition to that, Premier Insurance is 1.48 times more volatile than Nimir Industrial Chemical. It trades about -0.05 of its total potential returns per unit of risk. Nimir Industrial Chemical is currently generating about 0.14 per unit of volatility. If you would invest  10,886  in Nimir Industrial Chemical on November 23, 2024 and sell it today you would earn a total of  3,792  from holding Nimir Industrial Chemical or generate 34.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy89.42%
ValuesDaily Returns

Premier Insurance  vs.  Nimir Industrial Chemical

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15PINL NICL
       Timeline  
Premier Insurance 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Premier Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Premier Insurance is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb55.25.45.65.866.26.46.6
Nimir Industrial Chemical 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Nimir Industrial Chemical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nimir Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb130135140145150155

Premier Insurance and Nimir Industrial Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-9.67-7.25-4.82-2.390.012.394.827.269.69 0.010.020.030.040.050.060.07
JavaScript chart by amCharts 3.21.15PINL NICL
       Returns  

Pair Trading with Premier Insurance and Nimir Industrial

The main advantage of trading using opposite Premier Insurance and Nimir Industrial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Premier Insurance position performs unexpectedly, Nimir Industrial 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 Nimir Industrial will offset losses from the drop in Nimir Industrial's long position.
The idea behind Premier Insurance and Nimir Industrial Chemical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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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