Correlation Between Nordon Indstrias and Mangels Industrial

Can any of the company-specific risk be diversified away by investing in both Nordon Indstrias and Mangels Industrial 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 Nordon Indstrias and Mangels Industrial into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nordon Indstrias Metalrgicas and Mangels Industrial SA, you can compare the effects of market volatilities on Nordon Indstrias and Mangels Industrial 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 Nordon Indstrias with a short position of Mangels Industrial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nordon Indstrias and Mangels Industrial.

Diversification Opportunities for Nordon Indstrias and Mangels Industrial

0.86

Correlation Coefficient

Nordon Indstrias  Mangels Industrial

Very poor diversification

The 3 months correlation between Nordon and Mangels is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Nordon Indstrias Metalrgicas and Mangels Industrial SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mangels Industrial and Nordon Indstrias 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 Nordon Indstrias Metalrgicas are associated (or correlated) with Mangels Industrial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mangels Industrial has no effect on the direction of Nordon Indstrias i.e., Nordon Indstrias and Mangels Industrial go up and down completely randomly.

Pair Corralation between Nordon Indstrias and Mangels Industrial

Assuming the 90 days trading horizon Nordon Indstrias Metalrgicas is expected to generate 2.74 times more return on investment than Mangels Industrial. However, Nordon Indstrias is 2.74 times more volatile than Mangels Industrial SA. It trades about 0.04 of its potential returns per unit of risk. Mangels Industrial SA is currently generating about -0.02 per unit of risk. If you would invest  640.00  in Nordon Indstrias Metalrgicas on October 10, 2024 and sell it today you would earn a total of  20.00  from holding Nordon Indstrias Metalrgicas or generate 3.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	99.16%
Values	Daily Returns

Nordon Indstrias Metalrgicas  vs.  Mangels Industrial SA

Nordon Indstrias Met

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordon Indstrias Metalrgicas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Mangels Industrial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mangels Industrial SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Preferred Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Nordon Indstrias and Mangels Industrial

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

The idea behind Nordon Indstrias Metalrgicas and Mangels Industrial 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.