Correlation Between Nippon Telegraph and Comcast Corp

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

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

Diversification Opportunities for Nippon Telegraph and Comcast Corp

-0.47

Correlation Coefficient

Nippon Telegraph  Comcast Corp

Very good diversification

The 3 months correlation between Nippon and Comcast is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Telegraph Telephone and Comcast Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Comcast Corp and Nippon Telegraph 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 Telegraph Telephone are associated (or correlated) with Comcast Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Comcast Corp has no effect on the direction of Nippon Telegraph i.e., Nippon Telegraph and Comcast Corp go up and down completely randomly.

Pair Corralation between Nippon Telegraph and Comcast Corp

Assuming the 90 days horizon Nippon Telegraph Telephone is expected to under-perform the Comcast Corp. In addition to that, Nippon Telegraph is 1.95 times more volatile than Comcast Corp. It trades about -0.08 of its total potential returns per unit of risk. Comcast Corp is currently generating about 0.01 per unit of volatility. If you would invest  3,899  in Comcast Corp on September 17, 2024 and sell it today you would lose (13.00) from holding Comcast Corp or give up 0.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.38%
Values	Daily Returns

Nippon Telegraph Telephone  vs.  Comcast Corp

Nippon Telegraph Tel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nippon Telegraph Telephone has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak 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.

Comcast Corp

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Nippon Telegraph and Comcast Corp

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

The idea behind Nippon Telegraph Telephone and Comcast Corp 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.