Correlation Between NGK Insulators and American Commerce

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

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

Diversification Opportunities for NGK Insulators and American Commerce

0.0

Correlation Coefficient

NGK Insulators  American Commerce

Pay attention - limited upside

The 3 months correlation between NGK and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NGK Insulators and American Commerce Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Commerce and NGK Insulators 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 NGK Insulators are associated (or correlated) with American Commerce. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Commerce has no effect on the direction of NGK Insulators i.e., NGK Insulators and American Commerce go up and down completely randomly.

Pair Corralation between NGK Insulators and American Commerce

If you would invest  1,209  in NGK Insulators on December 22, 2024 and sell it today you would earn a total of  77.00  from holding NGK Insulators or generate 6.37% return on investment over 90 days.

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

NGK Insulators  vs.  American Commerce Solutions

NGK Insulators

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in NGK Insulators are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain forward indicators, NGK Insulators may actually be approaching a critical reversion point that can send shares even higher in April 2025.

American Commerce

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Commerce Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, American Commerce is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NGK Insulators and American Commerce

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

The idea behind NGK Insulators and American Commerce Solutions 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.