Correlation Between Nahar Industrial and Home First

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

By analyzing existing cross correlation between Nahar Industrial Enterprises and Home First Finance, you can compare the effects of market volatilities on Nahar Industrial and Home First 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 Nahar Industrial with a short position of Home First. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nahar Industrial and Home First.

Diversification Opportunities for Nahar Industrial and Home First

0.18

Correlation Coefficient

Nahar Industrial  Home First

Average diversification

The 3 months correlation between Nahar and Home is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Nahar Industrial Enterprises and Home First Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Home First Finance and Nahar Industrial 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 Nahar Industrial Enterprises are associated (or correlated) with Home First. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Home First Finance has no effect on the direction of Nahar Industrial i.e., Nahar Industrial and Home First go up and down completely randomly.

Pair Corralation between Nahar Industrial and Home First

Assuming the 90 days trading horizon Nahar Industrial Enterprises is expected to generate 0.82 times more return on investment than Home First. However, Nahar Industrial Enterprises is 1.22 times less risky than Home First. It trades about 0.02 of its potential returns per unit of risk. Home First Finance is currently generating about -0.13 per unit of risk. If you would invest  14,973  in Nahar Industrial Enterprises on September 21, 2024 and sell it today you would earn a total of  205.00  from holding Nahar Industrial Enterprises or generate 1.37% return on investment over 90 days.

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

Nahar Industrial Enterprises  vs.  Home First Finance

Nahar Industrial Ent

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nahar Industrial Enterprises are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Nahar Industrial is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Home First Finance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Home First Finance has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Nahar Industrial and Home First

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

The idea behind Nahar Industrial Enterprises and Home First Finance 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.