Correlation Between Nidec and Fanuc

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

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

Diversification Opportunities for Nidec and Fanuc

0.14

Correlation Coefficient

Nidec  Fanuc

Average diversification

The 3 months correlation between Nidec and Fanuc is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nidec and Fanuc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fanuc and Nidec 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 Nidec are associated (or correlated) with Fanuc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fanuc has no effect on the direction of Nidec i.e., Nidec and Fanuc go up and down completely randomly.

Pair Corralation between Nidec and Fanuc

Assuming the 90 days horizon Nidec is expected to generate 12.05 times more return on investment than Fanuc. However, Nidec is 12.05 times more volatile than Fanuc. It trades about 0.08 of its potential returns per unit of risk. Fanuc is currently generating about 0.0 per unit of risk. If you would invest  2,451  in Nidec on September 12, 2024 and sell it today you would lose (605.00) from holding Nidec or give up 24.68% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.7%
Values	Daily Returns

Nidec  vs.  Fanuc

Nidec

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nidec are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nidec reported solid returns over the last few months and may actually be approaching a breakup point.

Fanuc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fanuc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Fanuc is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nidec and Fanuc

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

The idea behind Nidec and Fanuc 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.