Correlation Between E For and NCL International

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

By analyzing existing cross correlation between E for L and NCL International Logistics, you can compare the effects of market volatilities on E For and NCL International 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 E For with a short position of NCL International. Check out your portfolio center. Please also check ongoing floating volatility patterns of E For and NCL International.

Diversification Opportunities for E For and NCL International

0.65

Correlation Coefficient

E For  NCL International

Poor diversification

The 3 months correlation between EFORL and NCL is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding E for L and NCL International Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCL International and E For 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 E for L are associated (or correlated) with NCL International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCL International has no effect on the direction of E For i.e., E For and NCL International go up and down completely randomly.

Pair Corralation between E For and NCL International

Assuming the 90 days trading horizon E for L is expected to generate 0.79 times more return on investment than NCL International. However, E for L is 1.27 times less risky than NCL International. It trades about -0.18 of its potential returns per unit of risk. NCL International Logistics is currently generating about -0.16 per unit of risk. If you would invest  26.00  in E for L on December 26, 2024 and sell it today you would lose (10.00) from holding E for L or give up 38.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

E for L  vs.  NCL International Logistics

E for L

Risk-Adjusted Performance

Very Weak

Over the last 90 days E for L has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's fundamental drivers remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

NCL International

Risk-Adjusted Performance

Very Weak

Over the last 90 days NCL International Logistics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's essential indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with E For and NCL International

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

The idea behind E for L and NCL International Logistics 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.