Correlation Between National Bank and Mermeren Kombinat

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

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

Diversification Opportunities for National Bank and Mermeren Kombinat

0.13

Correlation Coefficient

National Bank  Mermeren Kombinat

Average diversification

The 3 months correlation between National and Mermeren is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Mermeren Kombinat AD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mermeren Kombinat and National Bank 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 Bank of are associated (or correlated) with Mermeren Kombinat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mermeren Kombinat has no effect on the direction of National Bank i.e., National Bank and Mermeren Kombinat go up and down completely randomly.

Pair Corralation between National Bank and Mermeren Kombinat

Assuming the 90 days trading horizon National Bank of is expected to generate 0.61 times more return on investment than Mermeren Kombinat. However, National Bank of is 1.63 times less risky than Mermeren Kombinat. It trades about 0.24 of its potential returns per unit of risk. Mermeren Kombinat AD is currently generating about -0.12 per unit of risk. If you would invest  710.00  in National Bank of on September 16, 2024 and sell it today you would earn a total of  75.00  from holding National Bank of or generate 10.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

National Bank of  vs.  Mermeren Kombinat AD

National Bank

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, National Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Mermeren Kombinat

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mermeren Kombinat AD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Mermeren Kombinat is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with National Bank and Mermeren Kombinat

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

The idea behind National Bank of and Mermeren Kombinat AD 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.