Correlation Between National Retail and ADHI KARYA

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

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

Diversification Opportunities for National Retail and ADHI KARYA

0.44

Correlation Coefficient

National Retail  ADHI KARYA

Very weak diversification

The 3 months correlation between National and ADHI is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding National Retail Properties and ADHI KARYA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADHI KARYA and National Retail 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 Retail Properties are associated (or correlated) with ADHI KARYA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADHI KARYA has no effect on the direction of National Retail i.e., National Retail and ADHI KARYA go up and down completely randomly.

Pair Corralation between National Retail and ADHI KARYA

Assuming the 90 days trading horizon National Retail Properties is expected to generate 0.17 times more return on investment than ADHI KARYA. However, National Retail Properties is 5.8 times less risky than ADHI KARYA. It trades about -0.01 of its potential returns per unit of risk. ADHI KARYA is currently generating about -0.01 per unit of risk. If you would invest  4,257  in National Retail Properties on September 4, 2024 and sell it today you would lose (84.00) from holding National Retail Properties or give up 1.97% of portfolio value over 90 days.

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

National Retail Properties  vs.  ADHI KARYA

National Retail Prop

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Retail Properties has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, National Retail is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

ADHI KARYA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ADHI KARYA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ADHI KARYA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with National Retail and ADHI KARYA

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

The idea behind National Retail Properties and ADHI KARYA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.