Correlation Between NIPPON PROLOGIS and LIVZON PHARMAC

Can any of the company-specific risk be diversified away by investing in both NIPPON PROLOGIS and LIVZON PHARMAC 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 NIPPON PROLOGIS and LIVZON PHARMAC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between NIPPON PROLOGIS REIT and LIVZON PHARMAC GRP, you can compare the effects of market volatilities on NIPPON PROLOGIS and LIVZON PHARMAC 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 NIPPON PROLOGIS with a short position of LIVZON PHARMAC. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIPPON PROLOGIS and LIVZON PHARMAC.

Diversification Opportunities for NIPPON PROLOGIS and LIVZON PHARMAC

-0.65

Correlation Coefficient

NIPPON PROLOGIS  LIVZON PHARMAC

Excellent diversification

The 3 months correlation between NIPPON and LIVZON is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding NIPPON PROLOGIS REIT and LIVZON PHARMAC GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LIVZON PHARMAC GRP and NIPPON PROLOGIS 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 NIPPON PROLOGIS REIT are associated (or correlated) with LIVZON PHARMAC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LIVZON PHARMAC GRP has no effect on the direction of NIPPON PROLOGIS i.e., NIPPON PROLOGIS and LIVZON PHARMAC go up and down completely randomly.

Pair Corralation between NIPPON PROLOGIS and LIVZON PHARMAC

Assuming the 90 days trading horizon NIPPON PROLOGIS REIT is expected to under-perform the LIVZON PHARMAC. But the stock apears to be less risky and, when comparing its historical volatility, NIPPON PROLOGIS REIT is 5.38 times less risky than LIVZON PHARMAC. The stock trades about -0.06 of its potential returns per unit of risk. The LIVZON PHARMAC GRP is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  73.00  in LIVZON PHARMAC GRP on September 14, 2024 and sell it today you would earn a total of  253.00  from holding LIVZON PHARMAC GRP or generate 346.58% return on investment over 90 days.

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

NIPPON PROLOGIS REIT  vs.  LIVZON PHARMAC GRP

NIPPON PROLOGIS REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NIPPON PROLOGIS REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

LIVZON PHARMAC GRP

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LIVZON PHARMAC GRP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, LIVZON PHARMAC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NIPPON PROLOGIS and LIVZON PHARMAC

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

The idea behind NIPPON PROLOGIS REIT and LIVZON PHARMAC GRP 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.