Correlation Between Northwest Pipe and TechPrecision Common

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

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

Diversification Opportunities for Northwest Pipe and TechPrecision Common

0.67

Correlation Coefficient

Northwest Pipe  TechPrecision Common

Poor diversification

The 3 months correlation between Northwest and TechPrecision is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Northwest Pipe and TechPrecision Common in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TechPrecision Common and Northwest Pipe 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 Northwest Pipe are associated (or correlated) with TechPrecision Common. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TechPrecision Common has no effect on the direction of Northwest Pipe i.e., Northwest Pipe and TechPrecision Common go up and down completely randomly.

Pair Corralation between Northwest Pipe and TechPrecision Common

Given the investment horizon of 90 days Northwest Pipe is expected to generate 0.46 times more return on investment than TechPrecision Common. However, Northwest Pipe is 2.18 times less risky than TechPrecision Common. It trades about 0.2 of its potential returns per unit of risk. TechPrecision Common is currently generating about 0.07 per unit of risk. If you would invest  4,015  in Northwest Pipe on May 17, 2025 and sell it today you would earn a total of  1,219  from holding Northwest Pipe or generate 30.36% return on investment over 90 days.

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

Northwest Pipe  vs.  TechPrecision Common

Northwest Pipe

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Northwest Pipe are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, Northwest Pipe showed solid returns over the last few months and may actually be approaching a breakup point.

TechPrecision Common

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in TechPrecision Common are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, TechPrecision Common unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Northwest Pipe and TechPrecision Common

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

The idea behind Northwest Pipe and TechPrecision Common 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.