Correlation Between NMI Holdings and Cellink AB

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

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

Diversification Opportunities for NMI Holdings and Cellink AB

0.07

Correlation Coefficient

NMI Holdings  Cellink AB

Significant diversification

The 3 months correlation between NMI and Cellink is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and Cellink AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cellink AB and NMI Holdings 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 NMI Holdings are associated (or correlated) with Cellink AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cellink AB has no effect on the direction of NMI Holdings i.e., NMI Holdings and Cellink AB go up and down completely randomly.

Pair Corralation between NMI Holdings and Cellink AB

Assuming the 90 days horizon NMI Holdings is expected to generate 0.29 times more return on investment than Cellink AB. However, NMI Holdings is 3.39 times less risky than Cellink AB. It trades about 0.02 of its potential returns per unit of risk. Cellink AB is currently generating about -0.05 per unit of risk. If you would invest  3,740  in NMI Holdings on September 5, 2024 and sell it today you would earn a total of  40.00  from holding NMI Holdings or generate 1.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

NMI Holdings  vs.  Cellink AB

NMI Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NMI Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NMI Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Cellink AB

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cellink AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NMI Holdings and Cellink AB

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

The idea behind NMI Holdings and Cellink AB 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..