Correlation Between NAT ABSOLUTE and ALT Telecom

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

By analyzing existing cross correlation between NAT ABSOLUTE TECHNOLOGIES and ALT Telecom Public, you can compare the effects of market volatilities on NAT ABSOLUTE and ALT Telecom 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 NAT ABSOLUTE with a short position of ALT Telecom. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAT ABSOLUTE and ALT Telecom.

Diversification Opportunities for NAT ABSOLUTE and ALT Telecom

0.88

Correlation Coefficient

NAT ABSOLUTE  ALT Telecom

Very poor diversification

The 3 months correlation between NAT and ALT is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding NAT ABSOLUTE TECHNOLOGIES and ALT Telecom Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALT Telecom Public and NAT ABSOLUTE 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 NAT ABSOLUTE TECHNOLOGIES are associated (or correlated) with ALT Telecom. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALT Telecom Public has no effect on the direction of NAT ABSOLUTE i.e., NAT ABSOLUTE and ALT Telecom go up and down completely randomly.

Pair Corralation between NAT ABSOLUTE and ALT Telecom

Assuming the 90 days trading horizon NAT ABSOLUTE TECHNOLOGIES is expected to generate 0.66 times more return on investment than ALT Telecom. However, NAT ABSOLUTE TECHNOLOGIES is 1.52 times less risky than ALT Telecom. It trades about -0.17 of its potential returns per unit of risk. ALT Telecom Public is currently generating about -0.19 per unit of risk. If you would invest  430.00  in NAT ABSOLUTE TECHNOLOGIES on December 19, 2024 and sell it today you would lose (60.00) from holding NAT ABSOLUTE TECHNOLOGIES or give up 13.95% of portfolio value over 90 days.

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

NAT ABSOLUTE TECHNOLOGIES  vs.  ALT Telecom Public

NAT ABSOLUTE TECHNOLOGIES

Risk-Adjusted Performance

Very Weak

Over the last 90 days NAT ABSOLUTE TECHNOLOGIES has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

ALT Telecom Public

Risk-Adjusted Performance

Very Weak

Over the last 90 days ALT Telecom Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with NAT ABSOLUTE and ALT Telecom

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

The idea behind NAT ABSOLUTE TECHNOLOGIES and ALT Telecom Public 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.