Correlation Between Nahar Industrial and State Trading

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

By analyzing existing cross correlation between Nahar Industrial Enterprises and The State Trading, you can compare the effects of market volatilities on Nahar Industrial and State Trading 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 Nahar Industrial with a short position of State Trading. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nahar Industrial and State Trading.

Diversification Opportunities for Nahar Industrial and State Trading

0.79

Correlation Coefficient

Nahar Industrial  State Trading

Poor diversification

The 3 months correlation between Nahar and State is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Nahar Industrial Enterprises and The State Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Trading and Nahar Industrial 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 Nahar Industrial Enterprises are associated (or correlated) with State Trading. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Trading has no effect on the direction of Nahar Industrial i.e., Nahar Industrial and State Trading go up and down completely randomly.

Pair Corralation between Nahar Industrial and State Trading

Assuming the 90 days trading horizon Nahar Industrial Enterprises is expected to generate 0.91 times more return on investment than State Trading. However, Nahar Industrial Enterprises is 1.1 times less risky than State Trading. It trades about 0.15 of its potential returns per unit of risk. The State Trading is currently generating about 0.03 per unit of risk. If you would invest  13,225  in Nahar Industrial Enterprises on September 25, 2024 and sell it today you would earn a total of  949.00  from holding Nahar Industrial Enterprises or generate 7.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Nahar Industrial Enterprises  vs.  The State Trading

Nahar Industrial Ent

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nahar Industrial Enterprises has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Nahar Industrial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

State Trading

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The State Trading has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Nahar Industrial and State Trading

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

The idea behind Nahar Industrial Enterprises and The State Trading 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.