Correlation Between National Atomic and Shell Plc

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

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

Diversification Opportunities for National Atomic and Shell Plc

-0.28

Correlation Coefficient

National Atomic  Shell Plc

Very good diversification

The 3 months correlation between National and Shell is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding National Atomic Co and Shell plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shell plc and National Atomic 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 National Atomic Co are associated (or correlated) with Shell Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shell plc has no effect on the direction of National Atomic i.e., National Atomic and Shell Plc go up and down completely randomly.

Pair Corralation between National Atomic and Shell Plc

Assuming the 90 days trading horizon National Atomic Co is expected to under-perform the Shell Plc. In addition to that, National Atomic is 1.71 times more volatile than Shell plc. It trades about -0.06 of its total potential returns per unit of risk. Shell plc is currently generating about 0.2 per unit of volatility. If you would invest  241,688  in Shell plc on December 30, 2024 and sell it today you would earn a total of  37,962  from holding Shell plc or generate 15.71% return on investment over 90 days.

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

National Atomic Co  vs.  Shell plc

National Atomic

Risk-Adjusted Performance

Very Weak

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

Shell plc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Shell plc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Shell Plc unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with National Atomic and Shell Plc

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

The idea behind National Atomic Co and Shell plc 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.