Correlation Between NSE SA and CMG Cleantech

Can any of the company-specific risk be diversified away by investing in both NSE SA and CMG Cleantech 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 NSE SA and CMG Cleantech into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for NSE SA and CMG Cleantech

-0.57

Correlation Coefficient

NSE SA  CMG Cleantech

Excellent diversification

The 3 months correlation between NSE and CMG is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding NSE SA and CMG Cleantech SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMG Cleantech SA and NSE SA 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 NSE SA are associated (or correlated) with CMG Cleantech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMG Cleantech SA has no effect on the direction of NSE SA i.e., NSE SA and CMG Cleantech go up and down completely randomly.

Pair Corralation between NSE SA and CMG Cleantech

Assuming the 90 days trading horizon NSE SA is expected to generate 1.72 times more return on investment than CMG Cleantech. However, NSE SA is 1.72 times more volatile than CMG Cleantech SA. It trades about 0.22 of its potential returns per unit of risk. CMG Cleantech SA is currently generating about -0.11 per unit of risk. If you would invest  2,890  in NSE SA on December 29, 2024 and sell it today you would earn a total of  1,910  from holding NSE SA or generate 66.09% return on investment over 90 days.

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

NSE SA  vs.  CMG Cleantech SA

NSE SA

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NSE SA are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, NSE SA reported solid returns over the last few months and may actually be approaching a breakup point.

CMG Cleantech SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days CMG Cleantech SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with NSE SA and CMG Cleantech

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

The idea behind NSE SA and CMG Cleantech SA 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.