Correlation Between NCL International and Mono Next

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

Diversification Opportunities for NCL International and Mono Next

0.17

Correlation Coefficient

NCL International  Mono Next

Average diversification

The 3 months correlation between NCL and Mono is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding NCL International Logistics and Mono Next Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mono Next Public 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 Mono Next. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mono Next Public has no effect on the direction of NCL International i.e., NCL International and Mono Next go up and down completely randomly.

Pair Corralation between NCL International and Mono Next

Assuming the 90 days trading horizon NCL International is expected to generate 2.11 times less return on investment than Mono Next. But when comparing it to its historical volatility, NCL International Logistics is 1.57 times less risky than Mono Next. It trades about 0.19 of its potential returns per unit of risk. Mono Next Public is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  165.00  in Mono Next Public on September 5, 2024 and sell it today you would earn a total of  75.00  from holding Mono Next Public or generate 45.45% return on investment over 90 days.

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

NCL International Logistics  vs.  Mono Next Public

NCL International

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NCL International Logistics are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting essential indicators, NCL International disclosed solid returns over the last few months and may actually be approaching a breakup point.

Mono Next Public

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mono Next Public are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite weak forward-looking signals, Mono Next disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NCL International and Mono Next

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

The idea behind NCL International Logistics and Mono Next Public 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.