Correlation Between Eshallgo and NAPCO Security

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

By analyzing existing cross correlation between Eshallgo Class A and NAPCO Security Technologies, you can compare the effects of market volatilities on Eshallgo and NAPCO Security 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 Eshallgo with a short position of NAPCO Security. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eshallgo and NAPCO Security.

Diversification Opportunities for Eshallgo and NAPCO Security

-0.35

Correlation Coefficient

Eshallgo  NAPCO Security

Very good diversification

The 3 months correlation between Eshallgo and NAPCO is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Eshallgo Class A and NAPCO Security Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAPCO Security Techn and Eshallgo 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 Eshallgo Class A are associated (or correlated) with NAPCO Security. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAPCO Security Techn has no effect on the direction of Eshallgo i.e., Eshallgo and NAPCO Security go up and down completely randomly.

Pair Corralation between Eshallgo and NAPCO Security

Given the investment horizon of 90 days Eshallgo Class A is expected to generate 2.9 times more return on investment than NAPCO Security. However, Eshallgo is 2.9 times more volatile than NAPCO Security Technologies. It trades about 0.18 of its potential returns per unit of risk. NAPCO Security Technologies is currently generating about 0.11 per unit of risk. If you would invest  218.00  in Eshallgo Class A on September 5, 2024 and sell it today you would earn a total of  188.00  from holding Eshallgo Class A or generate 86.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Eshallgo Class A  vs.  NAPCO Security Technologies

Eshallgo Class A

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Eshallgo Class A are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Eshallgo displayed solid returns over the last few months and may actually be approaching a breakup point.

NAPCO Security Techn

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NAPCO Security Technologies are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, NAPCO Security exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Eshallgo and NAPCO Security

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

The idea behind Eshallgo Class A and NAPCO Security Technologies 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.