Correlation Between FORMPIPE SOFTWARE and NMI Holdings

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

By analyzing existing cross correlation between FORMPIPE SOFTWARE AB and NMI Holdings, you can compare the effects of market volatilities on FORMPIPE SOFTWARE and NMI Holdings 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 FORMPIPE SOFTWARE with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of FORMPIPE SOFTWARE and NMI Holdings.

Diversification Opportunities for FORMPIPE SOFTWARE and NMI Holdings

-0.77

Correlation Coefficient

FORMPIPE SOFTWARE  NMI Holdings

Pay attention - limited upside

The 3 months correlation between FORMPIPE and NMI is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding FORMPIPE SOFTWARE AB and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and FORMPIPE SOFTWARE 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 FORMPIPE SOFTWARE AB are associated (or correlated) with NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of FORMPIPE SOFTWARE i.e., FORMPIPE SOFTWARE and NMI Holdings go up and down completely randomly.

Pair Corralation between FORMPIPE SOFTWARE and NMI Holdings

Assuming the 90 days horizon FORMPIPE SOFTWARE AB is expected to generate 1.72 times more return on investment than NMI Holdings. However, FORMPIPE SOFTWARE is 1.72 times more volatile than NMI Holdings. It trades about 0.12 of its potential returns per unit of risk. NMI Holdings is currently generating about -0.04 per unit of risk. If you would invest  199.00  in FORMPIPE SOFTWARE AB on December 28, 2024 and sell it today you would earn a total of  37.00  from holding FORMPIPE SOFTWARE AB or generate 18.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

FORMPIPE SOFTWARE AB  vs.  NMI Holdings

FORMPIPE SOFTWARE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FORMPIPE SOFTWARE AB are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, FORMPIPE SOFTWARE reported solid returns over the last few months and may actually be approaching a breakup point.

NMI Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days NMI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, NMI Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FORMPIPE SOFTWARE and NMI Holdings

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

The idea behind FORMPIPE SOFTWARE AB and NMI Holdings 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.