Correlation Between National Citizen and POT

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

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

Diversification Opportunities for National Citizen and POT

0.53

Correlation Coefficient

National Citizen  POT

Very weak diversification

The 3 months correlation between National and POT is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding National Citizen Commercial and PostTelecommunication Equipmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PostTelecommunication and National Citizen 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 National Citizen Commercial are associated (or correlated) with POT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PostTelecommunication has no effect on the direction of National Citizen i.e., National Citizen and POT go up and down completely randomly.

Pair Corralation between National Citizen and POT

Assuming the 90 days trading horizon National Citizen Commercial is expected to generate 0.25 times more return on investment than POT. However, National Citizen Commercial is 4.08 times less risky than POT. It trades about -0.04 of its potential returns per unit of risk. PostTelecommunication Equipment is currently generating about -0.02 per unit of risk. If you would invest  920,000  in National Citizen Commercial on September 29, 2024 and sell it today you would lose (30,000) from holding National Citizen Commercial or give up 3.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	63.08%
Values	Daily Returns

National Citizen Commercial  vs.  PostTelecommunication Equipmen

National Citizen Com

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Citizen Commercial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, National Citizen is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

PostTelecommunication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PostTelecommunication Equipment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, POT is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with National Citizen and POT

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

The idea behind National Citizen Commercial and PostTelecommunication Equipment 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.