Correlation Between TNB and NPXS

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Can any of the company-specific risk be diversified away by investing in both TNB and NPXS 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 TNB and NPXS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TNB and NPXS, you can compare the effects of market volatilities on TNB and NPXS 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 TNB with a short position of NPXS. Check out your portfolio center. Please also check ongoing floating volatility patterns of TNB and NPXS.

Diversification Opportunities for TNB and NPXS

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between TNB and NPXS is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding TNB and NPXS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NPXS and TNB 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 TNB are associated (or correlated) with NPXS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NPXS has no effect on the direction of TNB i.e., TNB and NPXS go up and down completely randomly.

Pair Corralation between TNB and NPXS

Assuming the 90 days trading horizon TNB is expected to generate 28.15 times less return on investment than NPXS. But when comparing it to its historical volatility, TNB is 25.8 times less risky than NPXS. It trades about 0.2 of its potential returns per unit of risk. NPXS is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  0.02  in NPXS on December 30, 2023 and sell it today you would earn a total of  0.11  from holding NPXS or generate 477.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

TNB  vs.  NPXS

 Performance 
       Timeline  
TNB 

Risk-Adjusted Performance

18 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in TNB are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady fundamental drivers, TNB exhibited solid returns over the last few months and may actually be approaching a breakup point.
NPXS 

Risk-Adjusted Performance

9 of 100

 
Low
 
High
OK
Compared to the overall equity markets, risk-adjusted returns on investments in NPXS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, NPXS exhibited solid returns over the last few months and may actually be approaching a breakup point.

TNB and NPXS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TNB and NPXS

The main advantage of trading using opposite TNB and NPXS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TNB position performs unexpectedly, NPXS 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 NPXS will offset losses from the drop in NPXS's long position.
The idea behind TNB and NPXS 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.

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