Correlation Between NBTM New and JCHX Mining

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

By analyzing existing cross correlation between NBTM New Materials and JCHX Mining Management, you can compare the effects of market volatilities on NBTM New and JCHX Mining 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 NBTM New with a short position of JCHX Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBTM New and JCHX Mining.

Diversification Opportunities for NBTM New and JCHX Mining

0.74

Correlation Coefficient

NBTM New  JCHX Mining

Poor diversification

The 3 months correlation between NBTM and JCHX is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding NBTM New Materials and JCHX Mining Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JCHX Mining Management and NBTM New 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 NBTM New Materials are associated (or correlated) with JCHX Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JCHX Mining Management has no effect on the direction of NBTM New i.e., NBTM New and JCHX Mining go up and down completely randomly.

Pair Corralation between NBTM New and JCHX Mining

Assuming the 90 days trading horizon NBTM New Materials is expected to under-perform the JCHX Mining. In addition to that, NBTM New is 1.09 times more volatile than JCHX Mining Management. It trades about -0.25 of its total potential returns per unit of risk. JCHX Mining Management is currently generating about -0.14 per unit of volatility. If you would invest  4,203  in JCHX Mining Management on October 13, 2024 and sell it today you would lose (257.00) from holding JCHX Mining Management or give up 6.11% of portfolio value over 90 days.

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

NBTM New Materials  vs.  JCHX Mining Management

NBTM New Materials

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBTM New Materials has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

JCHX Mining Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JCHX Mining Management has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with NBTM New and JCHX Mining

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

The idea behind NBTM New Materials and JCHX Mining Management 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.