Correlation Between NLG and BTS

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

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

Diversification Opportunities for NLG and BTS

0.04

Correlation Coefficient

NLG  BTS

Significant diversification

The 3 months correlation between NLG and BTS is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding NLG and BTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BTS and NLG 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 NLG are associated (or correlated) with BTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BTS has no effect on the direction of NLG i.e., NLG and BTS go up and down completely randomly.

Pair Corralation between NLG and BTS

If you would invest  0.17  in BTS on September 2, 2024 and sell it today you would earn a total of  0.02  from holding BTS or generate 11.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.52%
Values	Daily Returns

NLG  vs.  BTS

NLG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NLG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, NLG is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

BTS

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in BTS are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, BTS exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NLG and BTS

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

The idea behind NLG and BTS 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.