Correlation Between Nukkleus and Fernhill Corp

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

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

Diversification Opportunities for Nukkleus and Fernhill Corp

-0.27

Correlation Coefficient

Nukkleus  Fernhill Corp

Very good diversification

The 3 months correlation between Nukkleus and Fernhill is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Nukkleus and Fernhill Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fernhill Corp and Nukkleus 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 Nukkleus are associated (or correlated) with Fernhill Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fernhill Corp has no effect on the direction of Nukkleus i.e., Nukkleus and Fernhill Corp go up and down completely randomly.

Pair Corralation between Nukkleus and Fernhill Corp

Given the investment horizon of 90 days Nukkleus is expected to generate 4.28 times more return on investment than Fernhill Corp. However, Nukkleus is 4.28 times more volatile than Fernhill Corp. It trades about 0.04 of its potential returns per unit of risk. Fernhill Corp is currently generating about 0.01 per unit of risk. If you would invest  6,137  in Nukkleus on October 10, 2024 and sell it today you would lose (3,604) from holding Nukkleus or give up 58.73% of portfolio value over 90 days.

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

Nukkleus  vs.  Fernhill Corp

Nukkleus

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nukkleus are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating forward-looking signals, Nukkleus disclosed solid returns over the last few months and may actually be approaching a breakup point.

Fernhill Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Fernhill Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Fernhill Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nukkleus and Fernhill Corp

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

The idea behind Nukkleus and Fernhill Corp 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.