Correlation Between NH Investment and Settlebank

Can any of the company-specific risk be diversified away by investing in both NH Investment and Settlebank 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 NH Investment and Settlebank into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NH Investment Securities and Settlebank, you can compare the effects of market volatilities on NH Investment and Settlebank 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 NH Investment with a short position of Settlebank. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Investment and Settlebank.

Diversification Opportunities for NH Investment and Settlebank

-0.18

Correlation Coefficient

NH Investment  Settlebank

Good diversification

The 3 months correlation between 005940 and Settlebank is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding NH Investment Securities and Settlebank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Settlebank and NH Investment 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 NH Investment Securities are associated (or correlated) with Settlebank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Settlebank has no effect on the direction of NH Investment i.e., NH Investment and Settlebank go up and down completely randomly.

Pair Corralation between NH Investment and Settlebank

Assuming the 90 days trading horizon NH Investment Securities is expected to generate 0.47 times more return on investment than Settlebank. However, NH Investment Securities is 2.11 times less risky than Settlebank. It trades about 0.08 of its potential returns per unit of risk. Settlebank is currently generating about -0.01 per unit of risk. If you would invest  862,275  in NH Investment Securities on September 29, 2024 and sell it today you would earn a total of  532,725  from holding NH Investment Securities or generate 61.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NH Investment Securities  vs.  Settlebank

NH Investment Securities

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NH Investment Securities are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NH Investment is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Settlebank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Settlebank has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with NH Investment and Settlebank

The main advantage of trading using opposite NH Investment and Settlebank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NH Investment position performs unexpectedly, Settlebank 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 Settlebank will offset losses from the drop in Settlebank's long position.

The idea behind NH Investment Securities and Settlebank 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.