Correlation Between NL Industries and ENEOS Holdings

Can any of the company-specific risk be diversified away by investing in both NL Industries and ENEOS Holdings 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 NL Industries and ENEOS Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for NL Industries and ENEOS Holdings

0.0

Correlation Coefficient

NL Industries  ENEOS Holdings

Pay attention - limited upside

The 3 months correlation between NL Industries and ENEOS is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and ENEOS Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENEOS Holdings and NL Industries 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 NL Industries are associated (or correlated) with ENEOS Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENEOS Holdings has no effect on the direction of NL Industries i.e., NL Industries and ENEOS Holdings go up and down completely randomly.

Pair Corralation between NL Industries and ENEOS Holdings

If you would invest  710.00  in NL Industries on February 24, 2024 and sell it today you would earn a total of  37.00  from holding NL Industries or generate 5.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

NL Industries  vs.  ENEOS Holdings

NL Industries

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NL Industries are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating essential indicators, NL Industries disclosed solid returns over the last few months and may actually be approaching a breakup point.

ENEOS Holdings

Risk-Adjusted Performance

0 of 100

OK

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

Pair Trading with NL Industries and ENEOS Holdings

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

The idea behind NL Industries and ENEOS Holdings 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..