Correlation Between Clime Investment and Nsx

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

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

Diversification Opportunities for Clime Investment and Nsx

0.11

Correlation Coefficient

Clime Investment  Nsx

Average diversification

The 3 months correlation between Clime and Nsx is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Clime Investment Management and Nsx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nsx and Clime Investment 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 Clime Investment Management are associated (or correlated) with Nsx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nsx has no effect on the direction of Clime Investment i.e., Clime Investment and Nsx go up and down completely randomly.

Pair Corralation between Clime Investment and Nsx

Assuming the 90 days trading horizon Clime Investment is expected to generate 1.3 times less return on investment than Nsx. But when comparing it to its historical volatility, Clime Investment Management is 2.44 times less risky than Nsx. It trades about 0.04 of its potential returns per unit of risk. Nsx is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2.67  in Nsx on October 6, 2024 and sell it today you would lose (0.37) from holding Nsx or give up 13.86% of portfolio value over 90 days.

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

Clime Investment Management  vs.  Nsx

Clime Investment Man

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Clime Investment Management are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Clime Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Nsx

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nsx has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nsx is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Clime Investment and Nsx

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

The idea behind Clime Investment Management and Nsx 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.

Check out your portfolio center.

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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.