Correlation Between Intergroup and Nortech Systems

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Can any of the company-specific risk be diversified away by investing in both Intergroup and Nortech Systems 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 Intergroup and Nortech Systems into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between The Intergroup and Nortech Systems Incorporated, you can compare the effects of market volatilities on Intergroup and Nortech Systems 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 Intergroup with a short position of Nortech Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Intergroup and Nortech Systems.

Diversification Opportunities for Intergroup and Nortech Systems

0.31
  Correlation Coefficient

Weak diversification

The 3 months correlation between Intergroup and Nortech is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding The Intergroup and Nortech Systems Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nortech Systems and Intergroup 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 The Intergroup are associated (or correlated) with Nortech Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nortech Systems has no effect on the direction of Intergroup i.e., Intergroup and Nortech Systems go up and down completely randomly.

Pair Corralation between Intergroup and Nortech Systems

Given the investment horizon of 90 days The Intergroup is expected to under-perform the Nortech Systems. But the stock apears to be less risky and, when comparing its historical volatility, The Intergroup is 1.43 times less risky than Nortech Systems. The stock trades about -0.11 of its potential returns per unit of risk. The Nortech Systems Incorporated is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,170  in Nortech Systems Incorporated on September 14, 2024 and sell it today you would lose (26.00) from holding Nortech Systems Incorporated or give up 2.22% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy98.41%
ValuesDaily Returns

The Intergroup  vs.  Nortech Systems Incorporated

 Performance 
       Timeline  
Intergroup 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days The Intergroup 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 January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
Nortech Systems 

Risk-Adjusted Performance

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Weak
 
Strong
Weak
Over the last 90 days Nortech Systems Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nortech Systems is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Intergroup and Nortech Systems Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Intergroup and Nortech Systems

The main advantage of trading using opposite Intergroup and Nortech Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intergroup position performs unexpectedly, Nortech Systems 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 Nortech Systems will offset losses from the drop in Nortech Systems' long position.
The idea behind The Intergroup and Nortech Systems Incorporated 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.

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