Correlation Between National CineMedia and Albemarle

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

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

Diversification Opportunities for National CineMedia and Albemarle

0.23

Correlation Coefficient

National CineMedia  Albemarle

Modest diversification

The 3 months correlation between National and Albemarle is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding National CineMedia and Albemarle in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albemarle and National CineMedia 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 CineMedia are associated (or correlated) with Albemarle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albemarle has no effect on the direction of National CineMedia i.e., National CineMedia and Albemarle go up and down completely randomly.

Pair Corralation between National CineMedia and Albemarle

Given the investment horizon of 90 days National CineMedia is expected to generate 1.1 times more return on investment than Albemarle. However, National CineMedia is 1.1 times more volatile than Albemarle. It trades about 0.07 of its potential returns per unit of risk. Albemarle is currently generating about -0.03 per unit of risk. If you would invest  473.00  in National CineMedia on October 9, 2024 and sell it today you would earn a total of  169.00  from holding National CineMedia or generate 35.73% return on investment over 90 days.

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

National CineMedia  vs.  Albemarle

National CineMedia

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National CineMedia are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong primary indicators, National CineMedia is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Albemarle

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Albemarle has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental drivers remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with National CineMedia and Albemarle

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

The idea behind National CineMedia and Albemarle 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.

Check out your portfolio center.

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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .