Correlation Between Alchemy Investments and NI Holdings

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

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

Diversification Opportunities for Alchemy Investments and NI Holdings

0.31

Correlation Coefficient

Alchemy Investments  NI Holdings

Weak diversification

The 3 months correlation between Alchemy and NODK is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Alchemy Investments Acquisitio and NI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NI Holdings and Alchemy Investments 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 Alchemy Investments Acquisition are associated (or correlated) with NI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NI Holdings has no effect on the direction of Alchemy Investments i.e., Alchemy Investments and NI Holdings go up and down completely randomly.

Pair Corralation between Alchemy Investments and NI Holdings

Given the investment horizon of 90 days Alchemy Investments Acquisition is expected to generate 1.35 times more return on investment than NI Holdings. However, Alchemy Investments is 1.35 times more volatile than NI Holdings. It trades about 0.01 of its potential returns per unit of risk. NI Holdings is currently generating about -0.03 per unit of risk. If you would invest  1,091  in Alchemy Investments Acquisition on September 24, 2024 and sell it today you would earn a total of  3.00  from holding Alchemy Investments Acquisition or generate 0.27% return on investment over 90 days.

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

Alchemy Investments Acquisitio  vs.  NI Holdings

Alchemy Investments

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alchemy Investments Acquisition are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, Alchemy Investments is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

NI Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NI Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent fundamental indicators, NI Holdings is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Alchemy Investments and NI Holdings

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

The idea behind Alchemy Investments Acquisition and NI Holdings 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.