Correlation Between NN Group and OCI NV

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

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

Diversification Opportunities for NN Group and OCI NV

-0.3

Correlation Coefficient

NN Group  OCI NV

Very good diversification

The 3 months correlation between NN Group and OCI is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding NN Group NV and OCI NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OCI NV and NN Group 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 NN Group NV are associated (or correlated) with OCI NV. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OCI NV has no effect on the direction of NN Group i.e., NN Group and OCI NV go up and down completely randomly.

Pair Corralation between NN Group and OCI NV

Assuming the 90 days horizon NN Group NV is expected to under-perform the OCI NV. But the stock apears to be less risky and, when comparing its historical volatility, NN Group NV is 1.52 times less risky than OCI NV. The stock trades about -0.32 of its potential returns per unit of risk. The OCI NV is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,105  in OCI NV on September 5, 2024 and sell it today you would earn a total of  6.00  from holding OCI NV or generate 0.54% return on investment over 90 days.

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

NN Group NV  vs.  OCI NV

NN Group NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NN Group NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, NN Group is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

OCI NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OCI NV has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with NN Group and OCI NV

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

The idea behind NN Group NV and OCI NV 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.