Correlation Between Ocean Plastics and Nak Sealing

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Can any of the company-specific risk be diversified away by investing in both Ocean Plastics and Nak Sealing 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 Ocean Plastics and Nak Sealing into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ocean Plastics Co and Nak Sealing Technologies, you can compare the effects of market volatilities on Ocean Plastics and Nak Sealing 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 Ocean Plastics with a short position of Nak Sealing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ocean Plastics and Nak Sealing.

Diversification Opportunities for Ocean Plastics and Nak Sealing

0.27
  Correlation Coefficient

Modest diversification

The 3 months correlation between Ocean and Nak is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Ocean Plastics Co and Nak Sealing Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nak Sealing Technologies and Ocean Plastics 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 Ocean Plastics Co are associated (or correlated) with Nak Sealing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nak Sealing Technologies has no effect on the direction of Ocean Plastics i.e., Ocean Plastics and Nak Sealing go up and down completely randomly.

Pair Corralation between Ocean Plastics and Nak Sealing

Assuming the 90 days trading horizon Ocean Plastics Co is expected to under-perform the Nak Sealing. But the stock apears to be less risky and, when comparing its historical volatility, Ocean Plastics Co is 1.46 times less risky than Nak Sealing. The stock trades about -0.23 of its potential returns per unit of risk. The Nak Sealing Technologies is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  11,400  in Nak Sealing Technologies on October 3, 2024 and sell it today you would lose (50.00) from holding Nak Sealing Technologies or give up 0.44% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Ocean Plastics Co  vs.  Nak Sealing Technologies

 Performance 
       Timeline  
Ocean Plastics 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Ocean Plastics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.
Nak Sealing Technologies 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Nak Sealing Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Nak Sealing is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ocean Plastics and Nak Sealing Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ocean Plastics and Nak Sealing

The main advantage of trading using opposite Ocean Plastics and Nak Sealing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ocean Plastics position performs unexpectedly, Nak Sealing 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 Nak Sealing will offset losses from the drop in Nak Sealing's long position.
The idea behind Ocean Plastics Co and Nak Sealing Technologies 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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