Correlation Between NLG and C20

Can any of the company-specific risk be diversified away by investing in both NLG and C20 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 C20 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NLG and C20, you can compare the effects of market volatilities on NLG and C20 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 C20. Check out your portfolio center. Please also check ongoing floating volatility patterns of NLG and C20.

Diversification Opportunities for NLG and C20

1.0

Correlation Coefficient

NLG  C20

No risk reduction

The 3 months correlation between NLG and C20 is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding NLG and C20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on C20 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 C20. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of C20 has no effect on the direction of NLG i.e., NLG and C20 go up and down completely randomly.

Pair Corralation between NLG and C20

If you would invest  180.00  in C20 on September 2, 2024 and sell it today you would earn a total of  0.00  from holding C20 or generate 0.0% return on investment over 90 days.

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

NLG  vs.  C20

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.

C20

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days C20 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, C20 is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with NLG and C20

The main advantage of trading using opposite NLG and C20 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NLG position performs unexpectedly, C20 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 C20 will offset losses from the drop in C20's long position.

The idea behind NLG and C20 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.

Check out your portfolio center.

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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.