Correlation Between Pro Hawk and Namchow Chemical

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

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

Diversification Opportunities for Pro Hawk and Namchow Chemical

0.89

Correlation Coefficient

Pro Hawk  Namchow Chemical

Very poor diversification

The 3 months correlation between Pro and Namchow is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Pro Hawk and Namchow Chemical Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Namchow Chemical Ind and Pro Hawk 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 Pro Hawk are associated (or correlated) with Namchow Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Namchow Chemical Ind has no effect on the direction of Pro Hawk i.e., Pro Hawk and Namchow Chemical go up and down completely randomly.

Pair Corralation between Pro Hawk and Namchow Chemical

Assuming the 90 days trading horizon Pro Hawk is expected to generate 0.71 times more return on investment than Namchow Chemical. However, Pro Hawk is 1.4 times less risky than Namchow Chemical. It trades about 0.33 of its potential returns per unit of risk. Namchow Chemical Industrial is currently generating about 0.09 per unit of risk. If you would invest  16,800  in Pro Hawk on February 1, 2024 and sell it today you would earn a total of  1,800  from holding Pro Hawk or generate 10.71% return on investment over 90 days.

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

Pro Hawk  vs.  Namchow Chemical Industrial

Pro Hawk

Risk-Adjusted Performance

28 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Pro Hawk are ranked lower than 28 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Pro Hawk showed solid returns over the last few months and may actually be approaching a breakup point.

Namchow Chemical Ind

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Namchow Chemical Industrial are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Namchow Chemical showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pro Hawk and Namchow Chemical

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

The idea behind Pro Hawk and Namchow Chemical Industrial 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.