Correlation Between National Aerospace and Brighton Best

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

By analyzing existing cross correlation between National Aerospace Fasteners and Brighton Best International Taiwan, you can compare the effects of market volatilities on National Aerospace and Brighton Best 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 National Aerospace with a short position of Brighton Best. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Aerospace and Brighton Best.

Diversification Opportunities for National Aerospace and Brighton Best

-0.1

Correlation Coefficient

National Aerospace  Brighton Best

Good diversification

The 3 months correlation between National and Brighton is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding National Aerospace Fasteners and Brighton Best International Ta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brighton Best Intern and National Aerospace 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 National Aerospace Fasteners are associated (or correlated) with Brighton Best. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brighton Best Intern has no effect on the direction of National Aerospace i.e., National Aerospace and Brighton Best go up and down completely randomly.

Pair Corralation between National Aerospace and Brighton Best

Assuming the 90 days trading horizon National Aerospace Fasteners is expected to under-perform the Brighton Best. But the stock apears to be less risky and, when comparing its historical volatility, National Aerospace Fasteners is 1.05 times less risky than Brighton Best. The stock trades about -0.04 of its potential returns per unit of risk. The Brighton Best International Taiwan is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,400  in Brighton Best International Taiwan on September 23, 2024 and sell it today you would earn a total of  20.00  from holding Brighton Best International Taiwan or generate 0.59% return on investment over 90 days.

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

National Aerospace Fasteners  vs.  Brighton Best International Ta

National Aerospace

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Aerospace Fasteners has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, National Aerospace is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Brighton Best Intern

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brighton Best International Taiwan are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, Brighton Best is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with National Aerospace and Brighton Best

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

The idea behind National Aerospace Fasteners and Brighton Best International Taiwan 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 CEOs Directory module to screen CEOs from public companies around the world.