Correlation Between NH Investment and Green Cross

Can any of the company-specific risk be diversified away by investing in both NH Investment and Green Cross 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 Green Cross 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 Green Cross Lab, you can compare the effects of market volatilities on NH Investment and Green Cross 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 Green Cross. Check out your portfolio center. Please also check ongoing floating volatility patterns of NH Investment and Green Cross.

Diversification Opportunities for NH Investment and Green Cross

-0.15

Correlation Coefficient

NH Investment  Green Cross

Good diversification

The 3 months correlation between 005940 and Green is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding NH Investment Securities and Green Cross Lab in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Cross Lab 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 Green Cross. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Cross Lab has no effect on the direction of NH Investment i.e., NH Investment and Green Cross go up and down completely randomly.

Pair Corralation between NH Investment and Green Cross

Assuming the 90 days trading horizon NH Investment Securities is expected to generate 0.65 times more return on investment than Green Cross. However, NH Investment Securities is 1.54 times less risky than Green Cross. It trades about 0.06 of its potential returns per unit of risk. Green Cross Lab is currently generating about -0.05 per unit of risk. If you would invest  1,414,000  in NH Investment Securities on December 25, 2024 and sell it today you would earn a total of  63,000  from holding NH Investment Securities or generate 4.46% 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.  Green Cross Lab

NH Investment Securities

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NH Investment Securities are ranked lower than 5 (%) 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.

Green Cross Lab

Risk-Adjusted Performance

Very Weak

Over the last 90 days Green Cross Lab has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with NH Investment and Green Cross

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

The idea behind NH Investment Securities and Green Cross Lab 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.