Correlation Between Direct Communication and Nagarro SE

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

By analyzing existing cross correlation between Direct Communication Solutions and Nagarro SE, you can compare the effects of market volatilities on Direct Communication and Nagarro SE 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 Direct Communication with a short position of Nagarro SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Direct Communication and Nagarro SE.

Diversification Opportunities for Direct Communication and Nagarro SE

0.51

Correlation Coefficient

Direct Communication  Nagarro SE

Very weak diversification

The 3 months correlation between Direct and Nagarro is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Direct Communication Solutions and Nagarro SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nagarro SE and Direct Communication 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 Direct Communication Solutions are associated (or correlated) with Nagarro SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nagarro SE has no effect on the direction of Direct Communication i.e., Direct Communication and Nagarro SE go up and down completely randomly.

Pair Corralation between Direct Communication and Nagarro SE

Given the investment horizon of 90 days Direct Communication Solutions is expected to under-perform the Nagarro SE. In addition to that, Direct Communication is 1.29 times more volatile than Nagarro SE. It trades about -0.11 of its total potential returns per unit of risk. Nagarro SE is currently generating about -0.02 per unit of volatility. If you would invest  9,702  in Nagarro SE on February 23, 2024 and sell it today you would lose (774.00) from holding Nagarro SE or give up 7.98% of portfolio value over 90 days.

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

Direct Communication Solutions  vs.  Nagarro SE

Direct Communication

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Direct Communication Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Nagarro SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nagarro SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Nagarro SE is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Direct Communication and Nagarro SE

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

The idea behind Direct Communication Solutions and Nagarro SE 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 CEOs Directory module to screen CEOs from public companies around the world.