Correlation Between Nasmedia and Ni Steel

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

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

Diversification Opportunities for Nasmedia and Ni Steel

-0.3

Correlation Coefficient

Nasmedia  Ni Steel

Very good diversification

The 3 months correlation between Nasmedia and 008260 is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Nasmedia Co and Ni Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ni Steel and Nasmedia 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 Nasmedia Co are associated (or correlated) with Ni Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ni Steel has no effect on the direction of Nasmedia i.e., Nasmedia and Ni Steel go up and down completely randomly.

Pair Corralation between Nasmedia and Ni Steel

Assuming the 90 days trading horizon Nasmedia Co is expected to generate 0.98 times more return on investment than Ni Steel. However, Nasmedia Co is 1.02 times less risky than Ni Steel. It trades about 0.05 of its potential returns per unit of risk. Ni Steel is currently generating about -0.03 per unit of risk. If you would invest  1,379,473  in Nasmedia Co on November 29, 2024 and sell it today you would earn a total of  62,527  from holding Nasmedia Co or generate 4.53% return on investment over 90 days.

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

Nasmedia Co  vs.  Ni Steel

Nasmedia

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nasmedia Co are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Nasmedia is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Ni Steel

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ni Steel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Ni Steel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasmedia and Ni Steel

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

The idea behind Nasmedia Co and Ni Steel 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.