Correlation Between NCAB and Truecaller

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

By analyzing existing cross correlation between NCAB Group and Truecaller AB, you can compare the effects of market volatilities on NCAB and Truecaller 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 NCAB with a short position of Truecaller. Check out your portfolio center. Please also check ongoing floating volatility patterns of NCAB and Truecaller.

Diversification Opportunities for NCAB and Truecaller

-0.18

Correlation Coefficient

NCAB  Truecaller

Good diversification

The 3 months correlation between NCAB and Truecaller is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding NCAB Group and Truecaller AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truecaller AB and NCAB 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 NCAB Group are associated (or correlated) with Truecaller. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truecaller AB has no effect on the direction of NCAB i.e., NCAB and Truecaller go up and down completely randomly.

Pair Corralation between NCAB and Truecaller

Assuming the 90 days trading horizon NCAB is expected to generate 4.93 times less return on investment than Truecaller. But when comparing it to its historical volatility, NCAB Group is 1.3 times less risky than Truecaller. It trades about 0.01 of its potential returns per unit of risk. Truecaller AB is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,699  in Truecaller AB on September 29, 2024 and sell it today you would earn a total of  1,501  from holding Truecaller AB or generate 40.58% return on investment over 90 days.

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

NCAB Group  vs.  Truecaller AB

NCAB Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NCAB Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NCAB is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Truecaller AB

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Truecaller AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Truecaller sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NCAB and Truecaller

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

The idea behind NCAB Group and Truecaller AB 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.