Correlation Between NRG Energy and Acm Research

Can any of the company-specific risk be diversified away by investing in both NRG Energy and Acm Research 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 NRG Energy and Acm Research into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NRG Energy and Acm Research, you can compare the effects of market volatilities on NRG Energy and Acm Research 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 NRG Energy with a short position of Acm Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of NRG Energy and Acm Research.

Diversification Opportunities for NRG Energy and Acm Research

-0.34

Correlation Coefficient

NRG Energy  Acm Research

Very good diversification

The 3 months correlation between NRG and Acm is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding NRG Energy and Acm Research in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Acm Research and NRG Energy 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 NRG Energy are associated (or correlated) with Acm Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Acm Research has no effect on the direction of NRG Energy i.e., NRG Energy and Acm Research go up and down completely randomly.

Pair Corralation between NRG Energy and Acm Research

Considering the 90-day investment horizon NRG Energy is expected to generate 0.64 times more return on investment than Acm Research. However, NRG Energy is 1.57 times less risky than Acm Research. It trades about -0.09 of its potential returns per unit of risk. Acm Research is currently generating about -0.23 per unit of risk. If you would invest  9,689  in NRG Energy on September 22, 2024 and sell it today you would lose (644.00) from holding NRG Energy or give up 6.65% of portfolio value over 90 days.

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

NRG Energy  vs.  Acm Research

NRG Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NRG Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NRG Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Acm Research

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Acm Research has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest uncertain performance, the Stock's primary indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with NRG Energy and Acm Research

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

The idea behind NRG Energy and Acm Research 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.