Correlation Between MIPS AB and NCAB

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

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

Diversification Opportunities for MIPS AB and NCAB

0.6

Correlation Coefficient

MIPS AB  NCAB

Poor diversification

The 3 months correlation between MIPS and NCAB is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding MIPS AB and NCAB Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NCAB Group and MIPS AB 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 MIPS AB are associated (or correlated) with NCAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NCAB Group has no effect on the direction of MIPS AB i.e., MIPS AB and NCAB go up and down completely randomly.

Pair Corralation between MIPS AB and NCAB

Assuming the 90 days trading horizon MIPS AB is expected to generate 0.8 times more return on investment than NCAB. However, MIPS AB is 1.25 times less risky than NCAB. It trades about -0.12 of its potential returns per unit of risk. NCAB Group is currently generating about -0.12 per unit of risk. If you would invest  47,040  in MIPS AB on December 29, 2024 and sell it today you would lose (7,660) from holding MIPS AB or give up 16.28% of portfolio value over 90 days.

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

MIPS AB  vs.  NCAB Group

MIPS AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days MIPS AB has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

NCAB Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days NCAB Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with MIPS AB and NCAB

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

The idea behind MIPS AB and NCAB Group 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.