Correlation Between INDIKA ENERGY and National Bank

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

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

Diversification Opportunities for INDIKA ENERGY and National Bank

0.8

Correlation Coefficient

INDIKA ENERGY  National Bank

Very poor diversification

The 3 months correlation between INDIKA and National is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding INDIKA ENERGY and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and INDIKA ENERGY 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 INDIKA ENERGY are associated (or correlated) with National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank has no effect on the direction of INDIKA ENERGY i.e., INDIKA ENERGY and National Bank go up and down completely randomly.

Pair Corralation between INDIKA ENERGY and National Bank

Assuming the 90 days trading horizon INDIKA ENERGY is expected to generate 5.64 times more return on investment than National Bank. However, INDIKA ENERGY is 5.64 times more volatile than National Bank of. It trades about -0.02 of its potential returns per unit of risk. National Bank of is currently generating about -0.19 per unit of risk. If you would invest  7.05  in INDIKA ENERGY on December 22, 2024 and sell it today you would lose (1.30) from holding INDIKA ENERGY or give up 18.44% of portfolio value over 90 days.

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

INDIKA ENERGY  vs.  National Bank of

INDIKA ENERGY

Risk-Adjusted Performance

Very Weak

Over the last 90 days INDIKA ENERGY has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

National Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days National Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with INDIKA ENERGY and National Bank

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

The idea behind INDIKA ENERGY and National Bank of 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 Directory module to find actively traded commodities issued by global exchanges.