Correlation Between Nak Sealing and Ocean Plastics

Can any of the company-specific risk be diversified away by investing in both Nak Sealing and Ocean Plastics 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 Nak Sealing and Ocean Plastics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nak Sealing Technologies and Ocean Plastics Co, you can compare the effects of market volatilities on Nak Sealing and Ocean Plastics 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 Nak Sealing with a short position of Ocean Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nak Sealing and Ocean Plastics.

Diversification Opportunities for Nak Sealing and Ocean Plastics

0.27

Correlation Coefficient

Nak Sealing  Ocean Plastics

Modest diversification

The 3 months correlation between Nak and Ocean is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nak Sealing Technologies and Ocean Plastics Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ocean Plastics and Nak Sealing 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 Nak Sealing Technologies are associated (or correlated) with Ocean Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ocean Plastics has no effect on the direction of Nak Sealing i.e., Nak Sealing and Ocean Plastics go up and down completely randomly.

Pair Corralation between Nak Sealing and Ocean Plastics

Assuming the 90 days trading horizon Nak Sealing Technologies is expected to generate 1.12 times more return on investment than Ocean Plastics. However, Nak Sealing is 1.12 times more volatile than Ocean Plastics Co. It trades about 0.01 of its potential returns per unit of risk. Ocean Plastics Co is currently generating about -0.2 per unit of risk. If you would invest  11,350  in Nak Sealing Technologies on October 3, 2024 and sell it today you would earn a total of  0.00  from holding Nak Sealing Technologies or generate 0.0% return on investment over 90 days.

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

Nak Sealing Technologies  vs.  Ocean Plastics Co

Nak Sealing Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nak Sealing Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Nak Sealing is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Ocean Plastics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ocean Plastics Co has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Pair Trading with Nak Sealing and Ocean Plastics

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

The idea behind Nak Sealing Technologies and Ocean Plastics Co 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.