Correlation Between Namchow Chemical and Double Bond

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

By analyzing existing cross correlation between Namchow Chemical Industrial and Double Bond Chemical, you can compare the effects of market volatilities on Namchow Chemical and Double Bond 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 Namchow Chemical with a short position of Double Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of Namchow Chemical and Double Bond.

Diversification Opportunities for Namchow Chemical and Double Bond

0.65

Correlation Coefficient

Namchow Chemical  Double Bond

Poor diversification

The 3 months correlation between Namchow and Double is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Namchow Chemical Industrial and Double Bond Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Double Bond Chemical and Namchow Chemical 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 Namchow Chemical Industrial are associated (or correlated) with Double Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Double Bond Chemical has no effect on the direction of Namchow Chemical i.e., Namchow Chemical and Double Bond go up and down completely randomly.

Pair Corralation between Namchow Chemical and Double Bond

Assuming the 90 days trading horizon Namchow Chemical Industrial is expected to under-perform the Double Bond. But the stock apears to be less risky and, when comparing its historical volatility, Namchow Chemical Industrial is 1.04 times less risky than Double Bond. The stock trades about -0.08 of its potential returns per unit of risk. The Double Bond Chemical is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  4,300  in Double Bond Chemical on September 24, 2024 and sell it today you would earn a total of  10.00  from holding Double Bond Chemical or generate 0.23% return on investment over 90 days.

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

Namchow Chemical Industrial  vs.  Double Bond Chemical

Namchow Chemical Ind

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Namchow Chemical Industrial 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.

Double Bond Chemical

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Namchow Chemical and Double Bond

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

The idea behind Namchow Chemical Industrial and Double Bond Chemical 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.