Correlation Between NX Filtration and TKH Group

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

By analyzing existing cross correlation between NX Filtration Holding and TKH Group NV, you can compare the effects of market volatilities on NX Filtration and TKH 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 NX Filtration with a short position of TKH Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of NX Filtration and TKH Group.

Diversification Opportunities for NX Filtration and TKH Group

0.02

Correlation Coefficient

NX Filtration  TKH Group

Significant diversification

The 3 months correlation between NXFIL and TKH is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding NX Filtration Holding and TKH Group NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TKH Group NV and NX Filtration 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 NX Filtration Holding are associated (or correlated) with TKH Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TKH Group NV has no effect on the direction of NX Filtration i.e., NX Filtration and TKH Group go up and down completely randomly.

Pair Corralation between NX Filtration and TKH Group

Assuming the 90 days trading horizon NX Filtration is expected to generate 6.03 times less return on investment than TKH Group. In addition to that, NX Filtration is 1.53 times more volatile than TKH Group NV. It trades about 0.02 of its total potential returns per unit of risk. TKH Group NV is currently generating about 0.2 per unit of volatility. If you would invest  3,318  in TKH Group NV on December 21, 2024 and sell it today you would earn a total of  588.00  from holding TKH Group NV or generate 17.72% return on investment over 90 days.

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

NX Filtration Holding  vs.  TKH Group NV

NX Filtration Holding

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NX Filtration Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, NX Filtration is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

TKH Group NV

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TKH Group NV are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, TKH Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NX Filtration and TKH Group

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

The idea behind NX Filtration Holding and TKH Group NV 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.

Check out your portfolio center.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.