Correlation Between NATIONAL BANK and ICON PROPERTIES

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

By analyzing existing cross correlation between NATIONAL BANK OF and ICON PROPERTIES LIMITED, you can compare the effects of market volatilities on NATIONAL BANK and ICON PROPERTIES 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 BANK with a short position of ICON PROPERTIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATIONAL BANK and ICON PROPERTIES.

Diversification Opportunities for NATIONAL BANK and ICON PROPERTIES

0.02

Correlation Coefficient

NATIONAL BANK  ICON PROPERTIES

Significant diversification

The 3 months correlation between NATIONAL and ICON is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL BANK OF and ICON PROPERTIES LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ICON PROPERTIES and NATIONAL BANK 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 BANK OF are associated (or correlated) with ICON PROPERTIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ICON PROPERTIES has no effect on the direction of NATIONAL BANK i.e., NATIONAL BANK and ICON PROPERTIES go up and down completely randomly.

Pair Corralation between NATIONAL BANK and ICON PROPERTIES

Assuming the 90 days trading horizon NATIONAL BANK OF is expected to generate 1.59 times more return on investment than ICON PROPERTIES. However, NATIONAL BANK is 1.59 times more volatile than ICON PROPERTIES LIMITED. It trades about 0.27 of its potential returns per unit of risk. ICON PROPERTIES LIMITED is currently generating about 0.12 per unit of risk. If you would invest  344,994  in NATIONAL BANK OF on October 27, 2024 and sell it today you would earn a total of  203,445  from holding NATIONAL BANK OF or generate 58.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

NATIONAL BANK OF  vs.  ICON PROPERTIES LIMITED

NATIONAL BANK

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NATIONAL BANK OF are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, NATIONAL BANK exhibited solid returns over the last few months and may actually be approaching a breakup point.

ICON PROPERTIES

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ICON PROPERTIES LIMITED are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, ICON PROPERTIES unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NATIONAL BANK and ICON PROPERTIES

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

The idea behind NATIONAL BANK OF and ICON PROPERTIES LIMITED 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.