Correlation Between NL Industries and Roma Green

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

By analyzing existing cross correlation between NL Industries and Roma Green Finance, you can compare the effects of market volatilities on NL Industries and Roma Green 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 Roma Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of NL Industries and Roma Green.

Diversification Opportunities for NL Industries and Roma Green

0.33

Correlation Coefficient

NL Industries  Roma Green

Weak diversification

The 3 months correlation between NL Industries and Roma is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding NL Industries and Roma Green Finance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Roma Green Finance 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 Roma Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Roma Green Finance has no effect on the direction of NL Industries i.e., NL Industries and Roma Green go up and down completely randomly.

Pair Corralation between NL Industries and Roma Green

Allowing for the 90-day total investment horizon NL Industries is expected to generate 10.71 times less return on investment than Roma Green. But when comparing it to its historical volatility, NL Industries is 1.58 times less risky than Roma Green. It trades about 0.07 of its potential returns per unit of risk. Roma Green Finance is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest  73.00  in Roma Green Finance on March 1, 2025 and sell it today you would earn a total of  226.00  from holding Roma Green Finance or generate 309.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

NL Industries  vs.  Roma Green Finance

NL Industries

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NL Industries are ranked lower than 5 (%) 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.

Roma Green Finance

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Roma Green Finance are ranked lower than 34 (%) of all global equities and portfolios over the last 90 days. Despite somewhat fragile primary indicators, Roma Green sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NL Industries and Roma Green

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

The idea behind NL Industries and Roma Green Finance 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.