Correlation Between National Bank and Logismos Information

Can any of the company-specific risk be diversified away by investing in both National Bank and Logismos Information 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 Logismos Information 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 Logismos Information Systems, you can compare the effects of market volatilities on National Bank and Logismos Information 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 Logismos Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Logismos Information.

Diversification Opportunities for National Bank and Logismos Information

0.87

Correlation Coefficient

National Bank  Logismos Information

Very poor diversification

The 3 months correlation between National and Logismos is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Logismos Information Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Logismos Information 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 Logismos Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Logismos Information has no effect on the direction of National Bank i.e., National Bank and Logismos Information go up and down completely randomly.

Pair Corralation between National Bank and Logismos Information

Assuming the 90 days trading horizon National Bank is expected to generate 1.31 times less return on investment than Logismos Information. But when comparing it to its historical volatility, National Bank of is 1.39 times less risky than Logismos Information. It trades about 0.27 of its potential returns per unit of risk. Logismos Information Systems is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  125.00  in Logismos Information Systems on December 1, 2024 and sell it today you would earn a total of  48.00  from holding Logismos Information Systems or generate 38.4% return on investment over 90 days.

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

National Bank of  vs.  Logismos Information Systems

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.

Logismos Information

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Logismos Information Systems are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Logismos Information displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Bank and Logismos Information

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

The idea behind National Bank of and Logismos Information Systems 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.