Correlation Between Penta Ocean and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Penta Ocean and NMI Holdings 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 Penta Ocean and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penta Ocean Construction Co and NMI Holdings, you can compare the effects of market volatilities on Penta Ocean and NMI Holdings 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 Penta Ocean with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta Ocean and NMI Holdings.
Diversification Opportunities for Penta Ocean and NMI Holdings
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Penta and NMI is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Penta Ocean 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 Penta Ocean Construction Co are associated (or correlated) with NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of Penta Ocean i.e., Penta Ocean and NMI Holdings go up and down completely randomly.
Pair Corralation between Penta Ocean and NMI Holdings
Assuming the 90 days horizon Penta Ocean Construction Co is expected to generate 0.93 times more return on investment than NMI Holdings. However, Penta Ocean Construction Co is 1.07 times less risky than NMI Holdings. It trades about 0.15 of its potential returns per unit of risk. NMI Holdings is currently generating about -0.01 per unit of risk. If you would invest 370.00 in Penta Ocean Construction Co on September 13, 2024 and sell it today you would earn a total of 18.00 from holding Penta Ocean Construction Co or generate 4.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penta Ocean Construction Co vs. NMI Holdings
Performance |
| Timeline |
| Penta Ocean Construc |
| NMI Holdings |
Penta Ocean and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penta Ocean and NMI Holdings
The main advantage of trading using opposite Penta Ocean and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penta Ocean position performs unexpectedly, NMI Holdings 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 NMI Holdings will offset losses from the drop in NMI Holdings' long position.| Penta Ocean vs. Superior Plus Corp | Penta Ocean vs. SIVERS SEMICONDUCTORS AB | Penta Ocean vs. Norsk Hydro ASA | Penta Ocean vs. Reliance Steel Aluminum |
| NMI Holdings vs. JJ SNACK FOODS | NMI Holdings vs. Tradegate AG Wertpapierhandelsbank | NMI Holdings vs. JSC Halyk bank | NMI Holdings vs. VARIOUS EATERIES LS |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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