Correlation Between Nexam Chemical and Lifeclean International

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

Diversification Opportunities for Nexam Chemical and Lifeclean International

0.77
  Correlation Coefficient

Poor diversification

The 3 months correlation between Nexam and Lifeclean is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Nexam Chemical Holding and Lifeclean International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeclean International and Nexam Chemical 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 Nexam Chemical Holding are associated (or correlated) with Lifeclean International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeclean International has no effect on the direction of Nexam Chemical i.e., Nexam Chemical and Lifeclean International go up and down completely randomly.

Pair Corralation between Nexam Chemical and Lifeclean International

Assuming the 90 days trading horizon Nexam Chemical Holding is expected to generate 0.49 times more return on investment than Lifeclean International. However, Nexam Chemical Holding is 2.02 times less risky than Lifeclean International. It trades about -0.12 of its potential returns per unit of risk. Lifeclean International AB is currently generating about -0.21 per unit of risk. If you would invest  492.00  in Nexam Chemical Holding on September 6, 2024 and sell it today you would lose (122.00) from holding Nexam Chemical Holding or give up 24.8% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Nexam Chemical Holding  vs.  Lifeclean International AB

 Performance 
       Timeline  
Nexam Chemical Holding 

Risk-Adjusted Performance

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Very Weak
Over the last 90 days Nexam Chemical Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.
Lifeclean International 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Lifeclean International AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Nexam Chemical and Lifeclean International Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nexam Chemical and Lifeclean International

The main advantage of trading using opposite Nexam Chemical and Lifeclean International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexam Chemical position performs unexpectedly, Lifeclean International 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 Lifeclean International will offset losses from the drop in Lifeclean International's long position.
The idea behind Nexam Chemical Holding and Lifeclean International AB 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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