Correlation Between National Bank and Daios Plastics

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

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

Diversification Opportunities for National Bank and Daios Plastics

-0.34

Correlation Coefficient

National Bank  Daios Plastics

Very good diversification

The 3 months correlation between National and Daios is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Daios Plastics SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daios Plastics SA and National Bank 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 National Bank of are associated (or correlated) with Daios Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daios Plastics SA has no effect on the direction of National Bank i.e., National Bank and Daios Plastics go up and down completely randomly.

Pair Corralation between National Bank and Daios Plastics

Assuming the 90 days trading horizon National Bank of is expected to generate 0.64 times more return on investment than Daios Plastics. However, National Bank of is 1.56 times less risky than Daios Plastics. It trades about 0.27 of its potential returns per unit of risk. Daios Plastics SA is currently generating about -0.02 per unit of risk. If you would invest  694.00  in National Bank of on December 2, 2024 and sell it today you would earn a total of  198.00  from holding National Bank of or generate 28.53% return on investment over 90 days.

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

National Bank of  vs.  Daios Plastics SA

National Bank

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, National Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Daios Plastics SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Daios Plastics SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Daios Plastics is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with National Bank and Daios Plastics

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

The idea behind National Bank of and Daios Plastics 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.