Correlation Between NATIONAL INVESTMENT and MAURITIUS CHEMICAL

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

Diversification Opportunities for NATIONAL INVESTMENT and MAURITIUS CHEMICAL

0.28

Correlation Coefficient

NATIONAL INVESTMENT  MAURITIUS CHEMICAL

Modest diversification

The 3 months correlation between NATIONAL and MAURITIUS is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding NATIONAL INVESTMENT TRUST and MAURITIUS CHEMICAL FERTILIZER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAURITIUS CHEMICAL 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 MAURITIUS CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAURITIUS CHEMICAL has no effect on the direction of NATIONAL INVESTMENT i.e., NATIONAL INVESTMENT and MAURITIUS CHEMICAL go up and down completely randomly.

Pair Corralation between NATIONAL INVESTMENT and MAURITIUS CHEMICAL

Assuming the 90 days trading horizon NATIONAL INVESTMENT TRUST is expected to under-perform the MAURITIUS CHEMICAL. But the stock apears to be less risky and, when comparing its historical volatility, NATIONAL INVESTMENT TRUST is 1.09 times less risky than MAURITIUS CHEMICAL. The stock trades about -0.07 of its potential returns per unit of risk. The MAURITIUS CHEMICAL FERTILIZER is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  840.00  in MAURITIUS CHEMICAL FERTILIZER on October 13, 2024 and sell it today you would lose (36.00) from holding MAURITIUS CHEMICAL FERTILIZER or give up 4.29% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	66.6%
Values	Daily Returns

NATIONAL INVESTMENT TRUST  vs.  MAURITIUS CHEMICAL FERTILIZER

NATIONAL INVESTMENT TRUST

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NATIONAL INVESTMENT TRUST has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, NATIONAL INVESTMENT is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

MAURITIUS CHEMICAL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAURITIUS CHEMICAL FERTILIZER has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with NATIONAL INVESTMENT and MAURITIUS CHEMICAL

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

The idea behind NATIONAL INVESTMENT TRUST and MAURITIUS CHEMICAL FERTILIZER 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.