Correlation Between NMI Holdings and MONGOLIA ENERG

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

By analyzing existing cross correlation between NMI Holdings and MONGOLIA ENERG HD 02, you can compare the effects of market volatilities on NMI Holdings and MONGOLIA ENERG 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 NMI Holdings with a short position of MONGOLIA ENERG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NMI Holdings and MONGOLIA ENERG.

Diversification Opportunities for NMI Holdings and MONGOLIA ENERG

-0.11

Correlation Coefficient

NMI Holdings  MONGOLIA ENERG

Good diversification

The 3 months correlation between NMI and MONGOLIA is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding NMI Holdings and MONGOLIA ENERG HD 02 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MONGOLIA ENERG HD and NMI Holdings 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 NMI Holdings are associated (or correlated) with MONGOLIA ENERG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MONGOLIA ENERG HD has no effect on the direction of NMI Holdings i.e., NMI Holdings and MONGOLIA ENERG go up and down completely randomly.

Pair Corralation between NMI Holdings and MONGOLIA ENERG

Assuming the 90 days horizon NMI Holdings is expected to generate 19.93 times less return on investment than MONGOLIA ENERG. But when comparing it to its historical volatility, NMI Holdings is 3.38 times less risky than MONGOLIA ENERG. It trades about 0.02 of its potential returns per unit of risk. MONGOLIA ENERG HD 02 is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  5.70  in MONGOLIA ENERG HD 02 on September 5, 2024 and sell it today you would earn a total of  2.00  from holding MONGOLIA ENERG HD 02 or generate 35.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

NMI Holdings  vs.  MONGOLIA ENERG HD 02

NMI Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NMI Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, NMI Holdings is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

MONGOLIA ENERG HD

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in MONGOLIA ENERG HD 02 are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, MONGOLIA ENERG reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NMI Holdings and MONGOLIA ENERG

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

The idea behind NMI Holdings and MONGOLIA ENERG HD 02 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.