Correlation Between Nawi Brothers and Peninsula

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

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

Diversification Opportunities for Nawi Brothers and Peninsula

0.96

Correlation Coefficient

Nawi Brothers  Peninsula

Almost no diversification

The 3 months correlation between Nawi and Peninsula is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Nawi Brothers Group and Peninsula Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peninsula Group and Nawi Brothers 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 Nawi Brothers Group are associated (or correlated) with Peninsula. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peninsula Group has no effect on the direction of Nawi Brothers i.e., Nawi Brothers and Peninsula go up and down completely randomly.

Pair Corralation between Nawi Brothers and Peninsula

Assuming the 90 days trading horizon Nawi Brothers Group is expected to generate 1.17 times more return on investment than Peninsula. However, Nawi Brothers is 1.17 times more volatile than Peninsula Group. It trades about 0.41 of its potential returns per unit of risk. Peninsula Group is currently generating about 0.44 per unit of risk. If you would invest  280,224  in Nawi Brothers Group on September 12, 2024 and sell it today you would earn a total of  104,376  from holding Nawi Brothers Group or generate 37.25% return on investment over 90 days.

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

Nawi Brothers Group  vs.  Peninsula Group

Nawi Brothers Group

Risk-Adjusted Performance

32 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Nawi Brothers Group are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nawi Brothers sustained solid returns over the last few months and may actually be approaching a breakup point.

Peninsula Group

Risk-Adjusted Performance

34 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Peninsula Group are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Peninsula sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nawi Brothers and Peninsula

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

The idea behind Nawi Brothers Group and Peninsula Group 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.