Correlation Between Nimir Industrial and Silkbank

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

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

Diversification Opportunities for Nimir Industrial and Silkbank

0.53

Correlation Coefficient

Nimir Industrial  Silkbank

Very weak diversification

The 3 months correlation between Nimir and Silkbank is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Nimir Industrial Chemical and Silkbank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Silkbank and Nimir Industrial 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 Nimir Industrial Chemical are associated (or correlated) with Silkbank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Silkbank has no effect on the direction of Nimir Industrial i.e., Nimir Industrial and Silkbank go up and down completely randomly.

Pair Corralation between Nimir Industrial and Silkbank

Assuming the 90 days trading horizon Nimir Industrial Chemical is expected to generate 0.77 times more return on investment than Silkbank. However, Nimir Industrial Chemical is 1.31 times less risky than Silkbank. It trades about -0.03 of its potential returns per unit of risk. Silkbank is currently generating about -0.07 per unit of risk. If you would invest  14,100  in Nimir Industrial Chemical on October 12, 2024 and sell it today you would lose (400.00) from holding Nimir Industrial Chemical or give up 2.84% of portfolio value over 90 days.

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

Nimir Industrial Chemical  vs.  Silkbank

Nimir Industrial Chemical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nimir Industrial Chemical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting basic indicators, Nimir Industrial sustained solid returns over the last few months and may actually be approaching a breakup point.

Silkbank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Silkbank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Silkbank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nimir Industrial and Silkbank

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

The idea behind Nimir Industrial Chemical and Silkbank 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.