Correlation Between National Atomic and Young Cos

Can any of the company-specific risk be diversified away by investing in both National Atomic and Young Cos 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 Young Cos 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 Young Cos Brewery, you can compare the effects of market volatilities on National Atomic and Young Cos 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 Young Cos. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Atomic and Young Cos.

Diversification Opportunities for National Atomic and Young Cos

0.61

Correlation Coefficient

National Atomic  Young Cos

Poor diversification

The 3 months correlation between National and Young is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding National Atomic Co and Young Cos Brewery in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Young Cos Brewery 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 Young Cos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Young Cos Brewery has no effect on the direction of National Atomic i.e., National Atomic and Young Cos go up and down completely randomly.

Pair Corralation between National Atomic and Young Cos

Assuming the 90 days trading horizon National Atomic Co is expected to under-perform the Young Cos. But the stock apears to be less risky and, when comparing its historical volatility, National Atomic Co is 1.03 times less risky than Young Cos. The stock trades about -0.13 of its potential returns per unit of risk. The Young Cos Brewery is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  64,200  in Young Cos Brewery on December 2, 2024 and sell it today you would lose (6,200) from holding Young Cos Brewery or give up 9.66% of portfolio value over 90 days.

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

National Atomic Co  vs.  Young Cos Brewery

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.

Young Cos Brewery

Risk-Adjusted Performance

Very Weak

Over the last 90 days Young Cos Brewery 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 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 National Atomic and Young Cos

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

The idea behind National Atomic Co and Young Cos Brewery 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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.