Correlation Between Alphanam and National Citizen

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

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

Diversification Opportunities for Alphanam and National Citizen

0.66

Correlation Coefficient

Alphanam  National Citizen

Poor diversification

The 3 months correlation between Alphanam and National is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME and National Citizen Commercial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Citizen Com and Alphanam 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 Alphanam ME are associated (or correlated) with National Citizen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Citizen Com has no effect on the direction of Alphanam i.e., Alphanam and National Citizen go up and down completely randomly.

Pair Corralation between Alphanam and National Citizen

Assuming the 90 days trading horizon Alphanam ME is expected to under-perform the National Citizen. In addition to that, Alphanam is 2.32 times more volatile than National Citizen Commercial. It trades about -0.14 of its total potential returns per unit of risk. National Citizen Commercial is currently generating about -0.04 per unit of volatility. If you would invest  920,000  in National Citizen Commercial on September 28, 2024 and sell it today you would lose (30,000) from holding National Citizen Commercial or give up 3.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	57.81%
Values	Daily Returns

Alphanam ME  vs.  National Citizen Commercial

Alphanam ME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alphanam ME has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

National Citizen Com

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Citizen Commercial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, National Citizen is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Alphanam and National Citizen

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

The idea behind Alphanam ME and National Citizen Commercial 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.