Correlation Between Nortech Systems and Intergroup

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

By analyzing existing cross correlation between Nortech Systems Incorporated and The Intergroup, you can compare the effects of market volatilities on Nortech Systems and Intergroup 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 Nortech Systems with a short position of Intergroup. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nortech Systems and Intergroup.

Diversification Opportunities for Nortech Systems and Intergroup

0.37

Correlation Coefficient

Nortech Systems  Intergroup

Weak diversification

The 3 months correlation between Nortech and Intergroup is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nortech Systems Incorporated and The Intergroup in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intergroup and Nortech Systems 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 Nortech Systems Incorporated are associated (or correlated) with Intergroup. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intergroup has no effect on the direction of Nortech Systems i.e., Nortech Systems and Intergroup go up and down completely randomly.

Pair Corralation between Nortech Systems and Intergroup

Given the investment horizon of 90 days Nortech Systems Incorporated is expected to generate 0.93 times more return on investment than Intergroup. However, Nortech Systems Incorporated is 1.08 times less risky than Intergroup. It trades about 0.01 of its potential returns per unit of risk. The Intergroup is currently generating about -0.06 per unit of risk. If you would invest  1,054  in Nortech Systems Incorporated on December 4, 2024 and sell it today you would lose (55.00) from holding Nortech Systems Incorporated or give up 5.22% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	88.37%
Values	Daily Returns

Nortech Systems Incorporated  vs.  The Intergroup

Nortech Systems

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nortech Systems Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Intergroup

Risk-Adjusted Performance

Very Weak

Over the last 90 days The Intergroup has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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 Nortech Systems and Intergroup

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

The idea behind Nortech Systems Incorporated and The Intergroup 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.