Correlation Between Longfor Group and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both Longfor Group 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 Longfor Group and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Longfor Group Holdings and NMI Holdings, you can compare the effects of market volatilities on Longfor Group 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 Longfor Group with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Longfor Group and NMI Holdings.
Diversification Opportunities for Longfor Group and NMI Holdings
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Longfor and NMI is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Longfor Group Holdings and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and Longfor Group 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 Longfor Group Holdings 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 Longfor Group i.e., Longfor Group and NMI Holdings go up and down completely randomly.
Pair Corralation between Longfor Group and NMI Holdings
Assuming the 90 days horizon Longfor Group Holdings is expected to under-perform the NMI Holdings. In addition to that, Longfor Group is 1.71 times more volatile than NMI Holdings. It trades about -0.17 of its total potential returns per unit of risk. NMI Holdings is currently generating about 0.04 per unit of volatility. If you would invest 3,580 in NMI Holdings on August 29, 2024 and sell it today you would earn a total of 60.00 from holding NMI Holdings or generate 1.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Longfor Group Holdings vs. NMI Holdings
Performance |
| Timeline |
| Longfor Group Holdings |
| NMI Holdings |
Longfor Group and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Longfor Group and NMI Holdings
The main advantage of trading using opposite Longfor Group and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Longfor Group 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.| Longfor Group vs. ETFS Coffee ETC | Longfor Group vs. Zijin Mining Group | Longfor Group vs. LGI Homes | Longfor Group vs. GALENA MINING LTD |
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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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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