Correlation Between National Research and Simulations Plus

Can any of the company-specific risk be diversified away by investing in both National Research and Simulations Plus 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 Simulations Plus 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 Simulations Plus, you can compare the effects of market volatilities on National Research and Simulations Plus 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 Simulations Plus. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Research and Simulations Plus.

Diversification Opportunities for National Research and Simulations Plus

0.14

Correlation Coefficient

National Research  Simulations Plus

Average diversification

The 3 months correlation between National and Simulations is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding National Research Corp and Simulations Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Simulations Plus 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 Simulations Plus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Simulations Plus has no effect on the direction of National Research i.e., National Research and Simulations Plus go up and down completely randomly.

Pair Corralation between National Research and Simulations Plus

Considering the 90-day investment horizon National Research Corp is expected to under-perform the Simulations Plus. But the stock apears to be less risky and, when comparing its historical volatility, National Research Corp is 1.29 times less risky than Simulations Plus. The stock trades about -0.09 of its potential returns per unit of risk. The Simulations Plus is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  3,415  in Simulations Plus on February 3, 2025 and sell it today you would lose (83.00) from holding Simulations Plus or give up 2.43% of portfolio value over 90 days.

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

National Research Corp  vs.  Simulations Plus

National Research Corp

Risk-Adjusted Performance

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 weak performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in June 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Simulations Plus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Simulations Plus has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Simulations Plus is not utilizing all of its potentials. The recent stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with National Research and Simulations Plus

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

The idea behind National Research Corp and Simulations Plus 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.