Correlation Between Clean Science and NBCC

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

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

Diversification Opportunities for Clean Science and NBCC

0.06

Correlation Coefficient

Clean Science  NBCC

Significant diversification

The 3 months correlation between Clean and NBCC is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Clean Science and and NBCC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBCC Limited and Clean Science 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 Clean Science and are associated (or correlated) with NBCC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBCC Limited has no effect on the direction of Clean Science i.e., Clean Science and NBCC go up and down completely randomly.

Pair Corralation between Clean Science and NBCC

Assuming the 90 days trading horizon Clean Science is expected to generate 19.26 times less return on investment than NBCC. But when comparing it to its historical volatility, Clean Science and is 3.54 times less risky than NBCC. It trades about 0.01 of its potential returns per unit of risk. NBCC Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  2,347  in NBCC Limited on October 23, 2024 and sell it today you would earn a total of  7,529  from holding NBCC Limited or generate 320.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.79%
Values	Daily Returns

Clean Science and  vs.  NBCC Limited

Clean Science

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Clean Science and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Clean Science is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

NBCC Limited

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NBCC Limited are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, NBCC may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Clean Science and NBCC

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

The idea behind Clean Science and and NBCC Limited 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 CEOs Directory module to screen CEOs from public companies around the world.