Correlation Between National Bank and New Destiny

Can any of the company-specific risk be diversified away by investing in both National Bank and New Destiny 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 New Destiny 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 New Destiny Mining, you can compare the effects of market volatilities on National Bank and New Destiny 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 New Destiny. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and New Destiny.

Diversification Opportunities for National Bank and New Destiny

-0.86

Correlation Coefficient

National Bank  New Destiny

Pay attention - limited upside

The 3 months correlation between National and New is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and New Destiny Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Destiny Mining 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 New Destiny. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Destiny Mining has no effect on the direction of National Bank i.e., National Bank and New Destiny go up and down completely randomly.

Pair Corralation between National Bank and New Destiny

Assuming the 90 days trading horizon National Bank of is expected to generate 0.11 times more return on investment than New Destiny. However, National Bank of is 9.36 times less risky than New Destiny. It trades about 0.25 of its potential returns per unit of risk. New Destiny Mining is currently generating about -0.19 per unit of risk. If you would invest  2,276  in National Bank of on October 1, 2024 and sell it today you would earn a total of  234.00  from holding National Bank of or generate 10.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

National Bank of  vs.  New Destiny Mining

National Bank

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively abnormal basic indicators, National Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

New Destiny Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days New Destiny Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with National Bank and New Destiny

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

The idea behind National Bank of and New Destiny Mining 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.