Correlation Between Sanasa Development and Nations Trust

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

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

Diversification Opportunities for Sanasa Development and Nations Trust

0.85

Correlation Coefficient

Sanasa Development  Nations Trust

Very poor diversification

The 3 months correlation between Sanasa and Nations is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Sanasa Development Bank and Nations Trust Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nations Trust Bank and Sanasa Development 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 Sanasa Development Bank are associated (or correlated) with Nations Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nations Trust Bank has no effect on the direction of Sanasa Development i.e., Sanasa Development and Nations Trust go up and down completely randomly.

Pair Corralation between Sanasa Development and Nations Trust

Assuming the 90 days trading horizon Sanasa Development is expected to generate 3.95 times less return on investment than Nations Trust. In addition to that, Sanasa Development is 1.82 times more volatile than Nations Trust Bank. It trades about 0.02 of its total potential returns per unit of risk. Nations Trust Bank is currently generating about 0.18 per unit of volatility. If you would invest  17,325  in Nations Trust Bank on October 23, 2024 and sell it today you would earn a total of  1,025  from holding Nations Trust Bank or generate 5.92% return on investment over 90 days.

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

Sanasa Development Bank  vs.  Nations Trust Bank

Sanasa Development Bank

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Sanasa Development Bank are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Sanasa Development sustained solid returns over the last few months and may actually be approaching a breakup point.

Nations Trust Bank

Risk-Adjusted Performance

26 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Nations Trust Bank are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nations Trust sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sanasa Development and Nations Trust

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

The idea behind Sanasa Development Bank and Nations Trust Bank 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.