Correlation Between Intracom Constructions and National Bank

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

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

Diversification Opportunities for Intracom Constructions and National Bank

0.36

Correlation Coefficient

Intracom Constructions  National Bank

Weak diversification

The 3 months correlation between Intracom and National is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Intracom Constructions Societe and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and Intracom Constructions 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 Intracom Constructions Societe 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 Intracom Constructions i.e., Intracom Constructions and National Bank go up and down completely randomly.

Pair Corralation between Intracom Constructions and National Bank

Assuming the 90 days trading horizon Intracom Constructions Societe is expected to generate 0.74 times more return on investment than National Bank. However, Intracom Constructions Societe is 1.35 times less risky than National Bank. It trades about -0.05 of its potential returns per unit of risk. National Bank of is currently generating about -0.09 per unit of risk. If you would invest  501.00  in Intracom Constructions Societe on September 4, 2024 and sell it today you would lose (21.00) from holding Intracom Constructions Societe or give up 4.19% of portfolio value over 90 days.

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

Intracom Constructions Societe  vs.  National Bank of

Intracom Constructions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intracom Constructions Societe has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Intracom Constructions is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

National Bank

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Intracom Constructions and National Bank

The main advantage of trading using opposite Intracom Constructions and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intracom Constructions 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 Intracom Constructions Societe 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.