Correlation Between Neogen and Noranda Aluminum

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

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

Diversification Opportunities for Neogen and Noranda Aluminum

0.58

Correlation Coefficient

Neogen  Noranda Aluminum

Very weak diversification

The 3 months correlation between Neogen and Noranda is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Neogen and Noranda Aluminum Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Noranda Aluminum Holding and Neogen 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 Neogen are associated (or correlated) with Noranda Aluminum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Noranda Aluminum Holding has no effect on the direction of Neogen i.e., Neogen and Noranda Aluminum go up and down completely randomly.

Pair Corralation between Neogen and Noranda Aluminum

If you would invest (100.00) in Noranda Aluminum Holding on September 14, 2024 and sell it today you would earn a total of  100.00  from holding Noranda Aluminum Holding or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	0.0%
Values	Daily Returns

Neogen  vs.  Noranda Aluminum Holding

Neogen

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neogen has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Noranda Aluminum Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Noranda Aluminum Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Noranda Aluminum is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Neogen and Noranda Aluminum

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

The idea behind Neogen and Noranda Aluminum Holding 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.