Correlation Between ADHI KARYA and National Bank

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

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

Diversification Opportunities for ADHI KARYA and National Bank

-0.29

Correlation Coefficient

ADHI KARYA  National Bank

Very good diversification

The 3 months correlation between ADHI and National is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding ADHI KARYA and National Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank and ADHI KARYA 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 ADHI KARYA 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 ADHI KARYA i.e., ADHI KARYA and National Bank go up and down completely randomly.

Pair Corralation between ADHI KARYA and National Bank

Assuming the 90 days trading horizon ADHI KARYA is expected to generate 8.72 times more return on investment than National Bank. However, ADHI KARYA is 8.72 times more volatile than National Bank of. It trades about 0.18 of its potential returns per unit of risk. National Bank of is currently generating about 0.05 per unit of risk. If you would invest  0.90  in ADHI KARYA on October 24, 2024 and sell it today you would earn a total of  0.20  from holding ADHI KARYA or generate 22.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

ADHI KARYA  vs.  National Bank of

ADHI KARYA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADHI KARYA 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.

National Bank

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, National Bank is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ADHI KARYA and National Bank

The main advantage of trading using opposite ADHI KARYA and National Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ADHI KARYA 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 ADHI KARYA 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.