Correlation Between NGK Insulators and Amada

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

By analyzing existing cross correlation between NGK Insulators and Amada Co, you can compare the effects of market volatilities on NGK Insulators and Amada 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 Amada. Check out your portfolio center. Please also check ongoing floating volatility patterns of NGK Insulators and Amada.

Diversification Opportunities for NGK Insulators and Amada

-0.09

Correlation Coefficient

NGK Insulators  Amada

Good diversification

The 3 months correlation between NGK and Amada is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding NGK Insulators and Amada Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amada 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 Amada. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amada has no effect on the direction of NGK Insulators i.e., NGK Insulators and Amada go up and down completely randomly.

Pair Corralation between NGK Insulators and Amada

Assuming the 90 days horizon NGK Insulators is expected to generate 9.33 times more return on investment than Amada. However, NGK Insulators is 9.33 times more volatile than Amada Co. It trades about 0.05 of its potential returns per unit of risk. Amada Co is currently generating about 0.13 per unit of risk. If you would invest  1,209  in NGK Insulators on December 28, 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	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NGK Insulators  vs.  Amada Co

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 fragile forward indicators, NGK Insulators may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Amada

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Amada Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Amada is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NGK Insulators and Amada

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

The idea behind NGK Insulators and Amada Co 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.