Correlation Between NATIONAL INVESTMENT and NBS BANK

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

By analyzing existing cross correlation between NATIONAL INVESTMENT TRUST and NBS BANK LIMITED, you can compare the effects of market volatilities on NATIONAL INVESTMENT and NBS BANK 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 NATIONAL INVESTMENT with a short position of NBS BANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of NATIONAL INVESTMENT and NBS BANK.

Diversification Opportunities for NATIONAL INVESTMENT and NBS BANK

0.55

Correlation Coefficient

NATIONAL INVESTMENT  NBS BANK

Very weak diversification

The 3 months correlation between NATIONAL and NBS is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL INVESTMENT TRUST and NBS BANK LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBS BANK LIMITED and NATIONAL INVESTMENT 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 NATIONAL INVESTMENT TRUST are associated (or correlated) with NBS BANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBS BANK LIMITED has no effect on the direction of NATIONAL INVESTMENT i.e., NATIONAL INVESTMENT and NBS BANK go up and down completely randomly.

Pair Corralation between NATIONAL INVESTMENT and NBS BANK

Assuming the 90 days trading horizon NATIONAL INVESTMENT is expected to generate 2.29 times less return on investment than NBS BANK. But when comparing it to its historical volatility, NATIONAL INVESTMENT TRUST is 1.47 times less risky than NBS BANK. It trades about 0.22 of its potential returns per unit of risk. NBS BANK LIMITED is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  15,200  in NBS BANK LIMITED on December 4, 2024 and sell it today you would earn a total of  19,777  from holding NBS BANK LIMITED or generate 130.11% return on investment over 90 days.

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

NATIONAL INVESTMENT TRUST  vs.  NBS BANK LIMITED

NATIONAL INVESTMENT TRUST

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in NATIONAL INVESTMENT TRUST are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, NATIONAL INVESTMENT unveiled solid returns over the last few months and may actually be approaching a breakup point.

NBS BANK LIMITED

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in NBS BANK LIMITED are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, NBS BANK exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NATIONAL INVESTMENT and NBS BANK

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

The idea behind NATIONAL INVESTMENT TRUST and NBS BANK LIMITED 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.