Correlation Between National Australia and Ras Technology

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

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

Diversification Opportunities for National Australia and Ras Technology

0.09

Correlation Coefficient

National Australia  Ras Technology

Significant diversification

The 3 months correlation between National and Ras is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding National Australia Bank and Ras Technology Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ras Technology Holdings and National Australia 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 Australia Bank are associated (or correlated) with Ras Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ras Technology Holdings has no effect on the direction of National Australia i.e., National Australia and Ras Technology go up and down completely randomly.

Pair Corralation between National Australia and Ras Technology

Assuming the 90 days trading horizon National Australia Bank is expected to generate 0.04 times more return on investment than Ras Technology. However, National Australia Bank is 27.59 times less risky than Ras Technology. It trades about 0.02 of its potential returns per unit of risk. Ras Technology Holdings is currently generating about -0.01 per unit of risk. If you would invest  10,255  in National Australia Bank on December 30, 2024 and sell it today you would earn a total of  20.00  from holding National Australia Bank or generate 0.2% return on investment over 90 days.

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

National Australia Bank  vs.  Ras Technology Holdings

National Australia Bank

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in National Australia Bank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, National Australia is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Ras Technology Holdings

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ras Technology Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Ras Technology is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with National Australia and Ras Technology

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

The idea behind National Australia Bank and Ras Technology Holdings 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.