Correlation Between National Bank and Data Agro

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

Diversification Opportunities for National Bank and Data Agro

-0.19
  Correlation Coefficient

Good diversification

The 3 months correlation between National and Data is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Data Agro in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Data Agro 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 Data Agro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Data Agro has no effect on the direction of National Bank i.e., National Bank and Data Agro go up and down completely randomly.

Pair Corralation between National Bank and Data Agro

Assuming the 90 days trading horizon National Bank of is expected to under-perform the Data Agro. But the stock apears to be less risky and, when comparing its historical volatility, National Bank of is 1.64 times less risky than Data Agro. The stock trades about -0.24 of its potential returns per unit of risk. The Data Agro is currently generating about 0.45 of returns per unit of risk over similar time horizon. If you would invest  7,716  in Data Agro on September 28, 2024 and sell it today you would earn a total of  5,567  from holding Data Agro or generate 72.15% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

National Bank of  vs.  Data Agro

 Performance 
       Timeline  
National Bank 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days National Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, National Bank is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Data Agro 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Data Agro are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Data Agro sustained solid returns over the last few months and may actually be approaching a breakup point.

National Bank and Data Agro Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with National Bank and Data Agro

The main advantage of trading using opposite National Bank and Data Agro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Bank position performs unexpectedly, Data Agro 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 Data Agro will offset losses from the drop in Data Agro's long position.
The idea behind National Bank of and Data Agro 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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