Correlation Between Global Tech and NN

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

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

Diversification Opportunities for Global Tech and NN

-0.33

Correlation Coefficient

Global Tech  NN

Very good diversification

The 3 months correlation between Global and NN is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Global Tech Industries and NN Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NN Inc and Global Tech 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 Global Tech Industries are associated (or correlated) with NN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NN Inc has no effect on the direction of Global Tech i.e., Global Tech and NN go up and down completely randomly.

Pair Corralation between Global Tech and NN

Given the investment horizon of 90 days Global Tech Industries is expected to generate 10.29 times more return on investment than NN. However, Global Tech is 10.29 times more volatile than NN Inc. It trades about 0.23 of its potential returns per unit of risk. NN Inc is currently generating about -0.04 per unit of risk. If you would invest  3.00  in Global Tech Industries on December 1, 2024 and sell it today you would earn a total of  2.27  from holding Global Tech Industries or generate 75.67% return on investment over 90 days.

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

Global Tech Industries  vs.  NN Inc

Global Tech Industries

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Global Tech Industries are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Global Tech demonstrated solid returns over the last few months and may actually be approaching a breakup point.

NN Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days NN Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's fundamental drivers remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Global Tech and NN

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

The idea behind Global Tech Industries and NN Inc 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.