Correlation Between NISSAN CHEMICAL and Gaztransport Technigaz

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

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

Diversification Opportunities for NISSAN CHEMICAL and Gaztransport Technigaz

0.57

Correlation Coefficient

NISSAN CHEMICAL  Gaztransport Technigaz

Very weak diversification

The 3 months correlation between NISSAN and Gaztransport is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding NISSAN CHEMICAL IND and Gaztransport Technigaz SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gaztransport Technigaz and NISSAN 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 NISSAN CHEMICAL IND are associated (or correlated) with Gaztransport Technigaz. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gaztransport Technigaz has no effect on the direction of NISSAN CHEMICAL i.e., NISSAN CHEMICAL and Gaztransport Technigaz go up and down completely randomly.

Pair Corralation between NISSAN CHEMICAL and Gaztransport Technigaz

Assuming the 90 days trading horizon NISSAN CHEMICAL IND is expected to generate 0.65 times more return on investment than Gaztransport Technigaz. However, NISSAN CHEMICAL IND is 1.53 times less risky than Gaztransport Technigaz. It trades about 0.09 of its potential returns per unit of risk. Gaztransport Technigaz SA is currently generating about 0.05 per unit of risk. If you would invest  3,080  in NISSAN CHEMICAL IND on September 3, 2024 and sell it today you would earn a total of  180.00  from holding NISSAN CHEMICAL IND or generate 5.84% return on investment over 90 days.

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

NISSAN CHEMICAL IND  vs.  Gaztransport Technigaz SA

NISSAN CHEMICAL IND

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NISSAN CHEMICAL IND are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, NISSAN CHEMICAL is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Gaztransport Technigaz

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Gaztransport Technigaz SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Gaztransport Technigaz is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with NISSAN CHEMICAL and Gaztransport Technigaz

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

The idea behind NISSAN CHEMICAL IND and Gaztransport Technigaz SA 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.