Correlation Between NL Industries and Black Spade

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

By analyzing existing cross correlation between NL Industries and Black Spade Acquisition, you can compare the effects of market volatilities on NL Industries and Black Spade 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 NL Industries with a short position of Black Spade. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and Black Spade.

Diversification Opportunities for NL Industries and Black Spade

-0.52

Correlation Coefficient

NL Industries  Black Spade

Excellent diversification

The 3 months correlation between NL Industries and Black is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Black Spade Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Spade Acquisition and NL Industries 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 NL Industries are associated (or correlated) with Black Spade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Spade Acquisition has no effect on the direction of NL Industries i.e., NL Industries and Black Spade go up and down completely randomly.

Pair Corralation between NL Industries and Black Spade

Allowing for the 90-day total investment horizon NL Industries is expected to generate 1.05 times less return on investment than Black Spade. In addition to that, NL Industries is 11.75 times more volatile than Black Spade Acquisition. It trades about 0.0 of its total potential returns per unit of risk. Black Spade Acquisition is currently generating about 0.01 per unit of volatility. If you would invest  1,006  in Black Spade Acquisition on December 22, 2024 and sell it today you would earn a total of  1.00  from holding Black Spade Acquisition or generate 0.1% return on investment over 90 days.

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

NL Industries  vs.  Black Spade Acquisition

NL Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days NL Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent essential indicators, NL Industries is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Black Spade Acquisition

Risk-Adjusted Performance

Very Weak

Over the last 90 days Black Spade Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward indicators, Black Spade is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with NL Industries and Black Spade

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

The idea behind NL Industries and Black Spade Acquisition 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.