Correlation Between National Bank and Agritech

Can any of the company-specific risk be diversified away by investing in both National Bank and Agritech 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 Agritech 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 Agritech, you can compare the effects of market volatilities on National Bank and Agritech 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 Agritech. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Agritech.

Diversification Opportunities for National Bank and Agritech

0.12

Correlation Coefficient

National Bank  Agritech

Average diversification

The 3 months correlation between National and Agritech is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Agritech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agritech 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 Agritech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agritech has no effect on the direction of National Bank i.e., National Bank and Agritech go up and down completely randomly.

Pair Corralation between National Bank and Agritech

Assuming the 90 days trading horizon National Bank is expected to generate 1.17 times less return on investment than Agritech. In addition to that, National Bank is 1.03 times more volatile than Agritech. It trades about 0.12 of its total potential returns per unit of risk. Agritech is currently generating about 0.15 per unit of volatility. If you would invest  2,127  in Agritech on September 29, 2024 and sell it today you would earn a total of  1,531  from holding Agritech or generate 71.98% return on investment over 90 days.

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

National Bank of  vs.  Agritech

National Bank

Risk-Adjusted Performance

1 of 100

Weak

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

Agritech

Risk-Adjusted Performance

5 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Agritech are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Agritech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with National Bank and Agritech

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

The idea behind National Bank of and Agritech 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.