Correlation Between NAPCO Security and Thruvision Group

Can any of the company-specific risk be diversified away by investing in both NAPCO Security and Thruvision Group 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 NAPCO Security and Thruvision Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NAPCO Security Technologies and Thruvision Group plc, you can compare the effects of market volatilities on NAPCO Security and Thruvision Group 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 NAPCO Security with a short position of Thruvision Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of NAPCO Security and Thruvision Group.

Diversification Opportunities for NAPCO Security and Thruvision Group

0.92

Correlation Coefficient

NAPCO Security  Thruvision Group

Almost no diversification

The 3 months correlation between NAPCO and Thruvision is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding NAPCO Security Technologies and Thruvision Group plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thruvision Group plc and NAPCO Security 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 NAPCO Security Technologies are associated (or correlated) with Thruvision Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thruvision Group plc has no effect on the direction of NAPCO Security i.e., NAPCO Security and Thruvision Group go up and down completely randomly.

Pair Corralation between NAPCO Security and Thruvision Group

Given the investment horizon of 90 days NAPCO Security Technologies is expected to generate 0.31 times more return on investment than Thruvision Group. However, NAPCO Security Technologies is 3.23 times less risky than Thruvision Group. It trades about -0.28 of its potential returns per unit of risk. Thruvision Group plc is currently generating about -0.21 per unit of risk. If you would invest  3,670  in NAPCO Security Technologies on December 2, 2024 and sell it today you would lose (1,214) from holding NAPCO Security Technologies or give up 33.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	95.45%
Values	Daily Returns

NAPCO Security Technologies  vs.  Thruvision Group plc

NAPCO Security Techn

Risk-Adjusted Performance

Very Weak

Over the last 90 days NAPCO Security Technologies 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 rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Thruvision Group plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thruvision Group plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with NAPCO Security and Thruvision Group

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

The idea behind NAPCO Security Technologies and Thruvision Group plc 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..