Correlation Between Nasdaq and Nisshin Seifun

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

By analyzing existing cross correlation between Nasdaq Inc and Nisshin Seifun Group, you can compare the effects of market volatilities on Nasdaq and Nisshin Seifun 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 Nasdaq with a short position of Nisshin Seifun. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq and Nisshin Seifun.

Diversification Opportunities for Nasdaq and Nisshin Seifun

0.41

Correlation Coefficient

Nasdaq  Nisshin Seifun

Very weak diversification

The 3 months correlation between Nasdaq and Nisshin is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq Inc and Nisshin Seifun Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nisshin Seifun Group and Nasdaq 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 Nasdaq Inc are associated (or correlated) with Nisshin Seifun. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nisshin Seifun Group has no effect on the direction of Nasdaq i.e., Nasdaq and Nisshin Seifun go up and down completely randomly.

Pair Corralation between Nasdaq and Nisshin Seifun

Given the investment horizon of 90 days Nasdaq Inc is expected to under-perform the Nisshin Seifun. But the stock apears to be less risky and, when comparing its historical volatility, Nasdaq Inc is 1.3 times less risky than Nisshin Seifun. The stock trades about -0.18 of its potential returns per unit of risk. The Nisshin Seifun Group is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  1,140  in Nisshin Seifun Group on September 23, 2024 and sell it today you would lose (30.00) from holding Nisshin Seifun Group or give up 2.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

Nasdaq Inc  vs.  Nisshin Seifun Group

Nasdaq Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Nasdaq is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Nisshin Seifun Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Nasdaq and Nisshin Seifun

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

The idea behind Nasdaq Inc and Nisshin Seifun Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.