Correlation Between NCL International and K W

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

By analyzing existing cross correlation between NCL International Logistics and K W Metal, you can compare the effects of market volatilities on NCL International and K W 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 NCL International with a short position of K W. Check out your portfolio center. Please also check ongoing floating volatility patterns of NCL International and K W.

Diversification Opportunities for NCL International and K W

0.79

Correlation Coefficient

NCL International  K W

Poor diversification

The 3 months correlation between NCL and KWM is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding NCL International Logistics and K W Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K W Metal and NCL International 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 NCL International Logistics are associated (or correlated) with K W. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K W Metal has no effect on the direction of NCL International i.e., NCL International and K W go up and down completely randomly.

Pair Corralation between NCL International and K W

Assuming the 90 days trading horizon NCL International is expected to generate 1.08 times less return on investment than K W. In addition to that, NCL International is 1.01 times more volatile than K W Metal. It trades about 0.04 of its total potential returns per unit of risk. K W Metal is currently generating about 0.04 per unit of volatility. If you would invest  242.00  in K W Metal on October 5, 2024 and sell it today you would lose (122.00) from holding K W Metal or give up 50.41% of portfolio value over 90 days.

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

NCL International Logistics  vs.  K W Metal

NCL International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NCL International Logistics 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 essential indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

K W Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days K W Metal has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's primary indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with NCL International and K W

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

The idea behind NCL International Logistics and K W Metal 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.