Correlation Between NEM INSURANCE and C I

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

By analyzing existing cross correlation between NEM INSURANCE PLC and C I LEASING, you can compare the effects of market volatilities on NEM INSURANCE and C I 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 NEM INSURANCE with a short position of C I. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEM INSURANCE and C I.

Diversification Opportunities for NEM INSURANCE and C I

-0.29

Correlation Coefficient

NEM INSURANCE  C I

Very good diversification

The 3 months correlation between NEM and CILEASING is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding NEM INSURANCE PLC and C I LEASING in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C I LEASING and NEM INSURANCE 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 NEM INSURANCE PLC are associated (or correlated) with C I. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C I LEASING has no effect on the direction of NEM INSURANCE i.e., NEM INSURANCE and C I go up and down completely randomly.

Pair Corralation between NEM INSURANCE and C I

Assuming the 90 days trading horizon NEM INSURANCE is expected to generate 4.43 times less return on investment than C I. But when comparing it to its historical volatility, NEM INSURANCE PLC is 1.58 times less risky than C I. It trades about 0.03 of its potential returns per unit of risk. C I LEASING is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  299.00  in C I LEASING on September 5, 2024 and sell it today you would earn a total of  116.00  from holding C I LEASING or generate 38.8% return on investment over 90 days.

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

NEM INSURANCE PLC  vs.  C I LEASING

NEM INSURANCE PLC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NEM INSURANCE PLC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent basic indicators, NEM INSURANCE unveiled solid returns over the last few months and may actually be approaching a breakup point.

C I LEASING

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in C I LEASING are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong basic indicators, C I is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with NEM INSURANCE and C I

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

The idea behind NEM INSURANCE PLC and C I LEASING 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.