Correlation Between Top Glove and Nephros
Can any of the company-specific risk be diversified away by investing in both Top Glove and Nephros 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 Top Glove and Nephros into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Top Glove and Nephros, you can compare the effects of market volatilities on Top Glove and Nephros 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 Top Glove with a short position of Nephros. Check out your portfolio center. Please also check ongoing floating volatility patterns of Top Glove and Nephros.
Diversification Opportunities for Top Glove and Nephros
Excellent diversification
The 3 months correlation between Top and Nephros is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Top Glove and Nephros in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nephros and Top Glove 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 Top Glove are associated (or correlated) with Nephros. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nephros has no effect on the direction of Top Glove i.e., Top Glove and Nephros go up and down completely randomly.
Pair Corralation between Top Glove and Nephros
Assuming the 90 days horizon Top Glove is expected to generate 2.8 times more return on investment than Nephros. However, Top Glove is 2.8 times more volatile than Nephros. It trades about 0.05 of its potential returns per unit of risk. Nephros is currently generating about 0.02 per unit of risk. If you would invest 21.00 in Top Glove on August 28, 2024 and sell it today you would earn a total of 4.00 from holding Top Glove or generate 19.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Top Glove vs. Nephros
Performance |
| Timeline |
| Top Glove |
| Nephros |
Top Glove and Nephros Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Top Glove and Nephros
The main advantage of trading using opposite Top Glove and Nephros positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Top Glove position performs unexpectedly, Nephros 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 Nephros will offset losses from the drop in Nephros' long position.| Top Glove vs. Sabre Corpo | Top Glove vs. Supercom | Top Glove vs. ATRenew Inc DRC | Top Glove vs. Fast Retailing Co |
| Nephros vs. Precision Optics, | Nephros vs. Repro Med Systems | Nephros vs. InfuSystems Holdings | Nephros vs. Utah Medical Products |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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