Correlation Between NMI Holdings and PLANT VEDA

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

By analyzing existing cross correlation between NMI Holdings and PLANT VEDA FOODS, you can compare the effects of market volatilities on NMI Holdings and PLANT VEDA 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 PLANT VEDA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and PLANT VEDA.

Diversification Opportunities for NMI Holdings and PLANT VEDA

0.0

Correlation Coefficient

NMI Holdings  PLANT VEDA

Pay attention - limited upside

The 3 months correlation between NMI and PLANT is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and PLANT VEDA FOODS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PLANT VEDA FOODS 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 PLANT VEDA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PLANT VEDA FOODS has no effect on the direction of NMI Holdings i.e., NMI Holdings and PLANT VEDA go up and down completely randomly.

Pair Corralation between NMI Holdings and PLANT VEDA

Assuming the 90 days horizon NMI Holdings is expected to generate 41.24 times less return on investment than PLANT VEDA. But when comparing it to its historical volatility, NMI Holdings is 27.3 times less risky than PLANT VEDA. It trades about 0.08 of its potential returns per unit of risk. PLANT VEDA FOODS is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  9.76  in PLANT VEDA FOODS on October 5, 2024 and sell it today you would lose (8.61) from holding PLANT VEDA FOODS or give up 88.22% of portfolio value over 90 days.

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

NMI Holdings  vs.  PLANT VEDA FOODS

NMI Holdings

Risk-Adjusted Performance

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Very Weak

Over the last 90 days NMI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

PLANT VEDA FOODS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PLANT VEDA FOODS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, PLANT VEDA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NMI Holdings and PLANT VEDA

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

The idea behind NMI Holdings and PLANT VEDA FOODS 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.