Correlation Between Nuode Investment and HMTNew Technical

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

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

Diversification Opportunities for Nuode Investment and HMTNew Technical

0.92

Correlation Coefficient

Nuode Investment  HMTNew Technical

Almost no diversification

The 3 months correlation between Nuode and HMTNew is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Nuode Investment Co and HMTNew Technical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HMTNew Technical and Nuode 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 Nuode Investment Co are associated (or correlated) with HMTNew Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HMTNew Technical has no effect on the direction of Nuode Investment i.e., Nuode Investment and HMTNew Technical go up and down completely randomly.

Pair Corralation between Nuode Investment and HMTNew Technical

Assuming the 90 days trading horizon Nuode Investment Co is expected to generate 0.96 times more return on investment than HMTNew Technical. However, Nuode Investment Co is 1.04 times less risky than HMTNew Technical. It trades about 0.22 of its potential returns per unit of risk. HMTNew Technical is currently generating about 0.13 per unit of risk. If you would invest  272.00  in Nuode Investment Co on September 9, 2024 and sell it today you would earn a total of  191.00  from holding Nuode Investment Co or generate 70.22% return on investment over 90 days.

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

Nuode Investment Co  vs.  HMTNew Technical

Nuode Investment

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nuode Investment Co are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nuode Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

HMTNew Technical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HMTNew Technical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, HMTNew Technical sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nuode Investment and HMTNew Technical

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

The idea behind Nuode Investment Co and HMTNew Technical 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.