Correlation Between National Research and Milestone Scientific

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

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

Diversification Opportunities for National Research and Milestone Scientific

0.69

Correlation Coefficient

National Research  Milestone Scientific

Poor diversification

The 3 months correlation between National and Milestone is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding National Research Corp and Milestone Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Milestone Scientific and National Research 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 Research Corp are associated (or correlated) with Milestone Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Milestone Scientific has no effect on the direction of National Research i.e., National Research and Milestone Scientific go up and down completely randomly.

Pair Corralation between National Research and Milestone Scientific

Considering the 90-day investment horizon National Research Corp is expected to generate 0.99 times more return on investment than Milestone Scientific. However, National Research Corp is 1.01 times less risky than Milestone Scientific. It trades about -0.02 of its potential returns per unit of risk. Milestone Scientific is currently generating about -0.27 per unit of risk. If you would invest  1,945  in National Research Corp on August 17, 2024 and sell it today you would lose (48.00) from holding National Research Corp or give up 2.47% of portfolio value over 90 days.

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

National Research Corp  vs.  Milestone Scientific

National Research Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days National Research Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Milestone Scientific

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Milestone Scientific has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in December 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with National Research and Milestone Scientific

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

The idea behind National Research Corp and Milestone Scientific 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.