Correlation Between NL Industries and Criteo Sa

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

By analyzing existing cross correlation between NL Industries and Criteo Sa, you can compare the effects of market volatilities on NL Industries and Criteo Sa 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 Criteo Sa. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and Criteo Sa.

Diversification Opportunities for NL Industries and Criteo Sa

0.26

Correlation Coefficient

NL Industries  Criteo Sa

Modest diversification

The 3 months correlation between NL Industries and Criteo is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Criteo Sa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Criteo Sa 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 Criteo Sa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Criteo Sa has no effect on the direction of NL Industries i.e., NL Industries and Criteo Sa go up and down completely randomly.

Pair Corralation between NL Industries and Criteo Sa

Allowing for the 90-day total investment horizon NL Industries is expected to generate 1.22 times more return on investment than Criteo Sa. However, NL Industries is 1.22 times more volatile than Criteo Sa. It trades about 0.08 of its potential returns per unit of risk. Criteo Sa is currently generating about 0.06 per unit of risk. If you would invest  418.00  in NL Industries on October 5, 2024 and sell it today you would earn a total of  356.00  from holding NL Industries or generate 85.17% return on investment over 90 days.

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

NL Industries  vs.  Criteo Sa

NL Industries

Risk-Adjusted Performance

3 of 100

Weak

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

Criteo Sa

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Criteo Sa are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Criteo Sa may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with NL Industries and Criteo Sa

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

The idea behind NL Industries and Criteo Sa 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.

Check out your portfolio center.

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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.