Correlation Between NAU IB and Finebesteel

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

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

Diversification Opportunities for NAU IB and Finebesteel

-0.12

Correlation Coefficient

NAU IB  Finebesteel

Good diversification

The 3 months correlation between NAU and Finebesteel is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding NAU IB Capital and Finebesteel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finebesteel and NAU IB 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 NAU IB Capital are associated (or correlated) with Finebesteel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finebesteel has no effect on the direction of NAU IB i.e., NAU IB and Finebesteel go up and down completely randomly.

Pair Corralation between NAU IB and Finebesteel

Assuming the 90 days trading horizon NAU IB Capital is expected to generate 1.89 times more return on investment than Finebesteel. However, NAU IB is 1.89 times more volatile than Finebesteel. It trades about 0.12 of its potential returns per unit of risk. Finebesteel is currently generating about 0.02 per unit of risk. If you would invest  96,096  in NAU IB Capital on October 8, 2024 and sell it today you would earn a total of  38,904  from holding NAU IB Capital or generate 40.48% return on investment over 90 days.

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

NAU IB Capital  vs.  Finebesteel

NAU IB Capital

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NAU IB Capital are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, NAU IB sustained solid returns over the last few months and may actually be approaching a breakup point.

Finebesteel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Finebesteel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Finebesteel is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with NAU IB and Finebesteel

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

The idea behind NAU IB Capital and Finebesteel 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.