Correlation Between ING Bank and Notoria

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

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

Diversification Opportunities for ING Bank and Notoria

-0.69

Correlation Coefficient

ING Bank  Notoria

Excellent diversification

The 3 months correlation between ING and Notoria is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding ING Bank lski and Notoria in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Notoria and ING 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 ING Bank lski are associated (or correlated) with Notoria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Notoria has no effect on the direction of ING Bank i.e., ING Bank and Notoria go up and down completely randomly.

Pair Corralation between ING Bank and Notoria

Assuming the 90 days trading horizon ING Bank lski is expected to under-perform the Notoria. But the stock apears to be less risky and, when comparing its historical volatility, ING Bank lski is 1.12 times less risky than Notoria. The stock trades about -0.03 of its potential returns per unit of risk. The Notoria is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  660.00  in Notoria on October 9, 2024 and sell it today you would earn a total of  170.00  from holding Notoria or generate 25.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	70.18%
Values	Daily Returns

ING Bank lski  vs.  Notoria

ING Bank lski

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ING Bank lski has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, ING Bank is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Notoria

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Notoria has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively weak basic indicators, Notoria reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ING Bank and Notoria

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

The idea behind ING Bank lski and Notoria 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.