Correlation Between ProStar Holdings and NamSys

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

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

Diversification Opportunities for ProStar Holdings and NamSys

-0.06

Correlation Coefficient

ProStar Holdings  NamSys

Good diversification

The 3 months correlation between ProStar and NamSys is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding ProStar Holdings and NamSys Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NamSys Inc and ProStar 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 ProStar Holdings are associated (or correlated) with NamSys. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NamSys Inc has no effect on the direction of ProStar Holdings i.e., ProStar Holdings and NamSys go up and down completely randomly.

Pair Corralation between ProStar Holdings and NamSys

Assuming the 90 days horizon ProStar Holdings is expected to under-perform the NamSys. In addition to that, ProStar Holdings is 1.08 times more volatile than NamSys Inc. It trades about -0.12 of its total potential returns per unit of risk. NamSys Inc is currently generating about 0.13 per unit of volatility. If you would invest  57.00  in NamSys Inc on September 12, 2024 and sell it today you would earn a total of  28.00  from holding NamSys Inc or generate 49.12% return on investment over 90 days.

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

ProStar Holdings  vs.  NamSys Inc

ProStar Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ProStar Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

NamSys Inc

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NamSys Inc are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NamSys reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ProStar Holdings and NamSys

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

The idea behind ProStar Holdings and NamSys Inc 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.