Correlation Between Golden Matrix and NL Industries

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

By analyzing existing cross correlation between Golden Matrix Group and NL Industries, you can compare the effects of market volatilities on Golden Matrix and NL Industries 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 Golden Matrix with a short position of NL Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Golden Matrix and NL Industries.

Diversification Opportunities for Golden Matrix and NL Industries

-0.13

Correlation Coefficient

Golden Matrix  NL Industries

Good diversification

The 3 months correlation between Golden and NL Industries is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Golden Matrix Group and NL Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NL Industries and Golden Matrix 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 Golden Matrix Group are associated (or correlated) with NL Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NL Industries has no effect on the direction of Golden Matrix i.e., Golden Matrix and NL Industries go up and down completely randomly.

Pair Corralation between Golden Matrix and NL Industries

Given the investment horizon of 90 days Golden Matrix Group is expected to under-perform the NL Industries. In addition to that, Golden Matrix is 1.56 times more volatile than NL Industries. It trades about -0.01 of its total potential returns per unit of risk. NL Industries is currently generating about 0.1 per unit of volatility. If you would invest  590.00  in NL Industries on September 21, 2024 and sell it today you would earn a total of  192.00  from holding NL Industries or generate 32.54% return on investment over 90 days.

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

Golden Matrix Group  vs.  NL Industries

Golden Matrix Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Matrix Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

NL Industries

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NL Industries are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile essential indicators, NL Industries disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Golden Matrix and NL Industries

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

The idea behind Golden Matrix Group and NL Industries 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.

Check out your portfolio center.

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 Money Managers module to screen money managers from public funds and ETFs managed around the world.