Correlation Between NISSAN CHEMICAL and HEXINDO ADIPERKASA

Can any of the company-specific risk be diversified away by investing in both NISSAN CHEMICAL and HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA, you can compare the effects of market volatilities on NISSAN CHEMICAL and HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISSAN CHEMICAL and HEXINDO ADIPERKASA.

Diversification Opportunities for NISSAN CHEMICAL and HEXINDO ADIPERKASA

-0.43

Correlation Coefficient

NISSAN CHEMICAL  HEXINDO ADIPERKASA

Very good diversification

The 3 months correlation between NISSAN and HEXINDO is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding NISSAN CHEMICAL IND and HEXINDO ADIPERKASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HEXINDO ADIPERKASA 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 HEXINDO ADIPERKASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HEXINDO ADIPERKASA has no effect on the direction of NISSAN CHEMICAL i.e., NISSAN CHEMICAL and HEXINDO ADIPERKASA go up and down completely randomly.

Pair Corralation between NISSAN CHEMICAL and HEXINDO ADIPERKASA

Assuming the 90 days trading horizon NISSAN CHEMICAL IND is expected to generate 0.75 times more return on investment than HEXINDO ADIPERKASA. However, NISSAN CHEMICAL IND is 1.33 times less risky than HEXINDO ADIPERKASA. It trades about 0.1 of its potential returns per unit of risk. HEXINDO ADIPERKASA is currently generating about -0.09 per unit of risk. If you would invest  3,040  in NISSAN CHEMICAL IND on September 2, 2024 and sell it today you would earn a total of  220.00  from holding NISSAN CHEMICAL IND or generate 7.24% return on investment over 90 days.

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

NISSAN CHEMICAL IND  vs.  HEXINDO ADIPERKASA

NISSAN CHEMICAL IND

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in NISSAN CHEMICAL IND are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile fundamental indicators, NISSAN CHEMICAL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

HEXINDO ADIPERKASA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HEXINDO ADIPERKASA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with NISSAN CHEMICAL and HEXINDO ADIPERKASA

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

The idea behind NISSAN CHEMICAL IND and HEXINDO ADIPERKASA 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.