Correlation Between Nimir Industrial and TPL Insurance

Can any of the company-specific risk be diversified away by investing in both Nimir Industrial and TPL Insurance 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 TPL Insurance 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 TPL Insurance, you can compare the effects of market volatilities on Nimir Industrial and TPL Insurance 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 TPL Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nimir Industrial and TPL Insurance.

Diversification Opportunities for Nimir Industrial and TPL Insurance

-0.12

Correlation Coefficient

Nimir Industrial  TPL Insurance

Good diversification

The 3 months correlation between Nimir and TPL is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Nimir Industrial Chemical and TPL Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TPL Insurance 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 TPL Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TPL Insurance has no effect on the direction of Nimir Industrial i.e., Nimir Industrial and TPL Insurance go up and down completely randomly.

Pair Corralation between Nimir Industrial and TPL Insurance

Assuming the 90 days trading horizon Nimir Industrial Chemical is expected to generate 1.06 times more return on investment than TPL Insurance. However, Nimir Industrial is 1.06 times more volatile than TPL Insurance. It trades about -0.01 of its potential returns per unit of risk. TPL Insurance is currently generating about -0.13 per unit of risk. If you would invest  14,432  in Nimir Industrial Chemical on December 29, 2024 and sell it today you would lose (583.00) from holding Nimir Industrial Chemical or give up 4.04% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Nimir Industrial Chemical  vs.  TPL Insurance

Nimir Industrial Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nimir Industrial Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Nimir Industrial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

TPL Insurance

Risk-Adjusted Performance

Very Weak

Over the last 90 days TPL Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Nimir Industrial and TPL Insurance

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

The idea behind Nimir Industrial Chemical and TPL Insurance 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 Transaction History module to view history of all your transactions and understand their impact on performance.