Correlation Between Nancal Energy and Metro Investment

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

By analyzing existing cross correlation between Nancal Energy Saving Tech and Metro Investment Development, you can compare the effects of market volatilities on Nancal Energy and Metro Investment 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 Nancal Energy with a short position of Metro Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nancal Energy and Metro Investment.

Diversification Opportunities for Nancal Energy and Metro Investment

0.59

Correlation Coefficient

Nancal Energy  Metro Investment

Very weak diversification

The 3 months correlation between Nancal and Metro is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Nancal Energy Saving Tech and Metro Investment Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Investment Dev and Nancal Energy 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 Nancal Energy Saving Tech are associated (or correlated) with Metro Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Investment Dev has no effect on the direction of Nancal Energy i.e., Nancal Energy and Metro Investment go up and down completely randomly.

Pair Corralation between Nancal Energy and Metro Investment

Assuming the 90 days trading horizon Nancal Energy is expected to generate 7.5 times less return on investment than Metro Investment. In addition to that, Nancal Energy is 1.68 times more volatile than Metro Investment Development. It trades about 0.0 of its total potential returns per unit of risk. Metro Investment Development is currently generating about 0.05 per unit of volatility. If you would invest  404.00  in Metro Investment Development on September 1, 2024 and sell it today you would earn a total of  51.00  from holding Metro Investment Development or generate 12.62% return on investment over 90 days.

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

Nancal Energy Saving Tech  vs.  Metro Investment Development

Nancal Energy Saving

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nancal Energy Saving Tech are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nancal Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Metro Investment Dev

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Metro Investment Development are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Metro Investment sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nancal Energy and Metro Investment

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

The idea behind Nancal Energy Saving Tech and Metro Investment Development 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.