Correlation Between Nissan Chemical and NISSAN CHEMICAL

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

By analyzing existing cross correlation between Nissan Chemical Corp and NISSAN CHEMICAL IND, you can compare the effects of market volatilities on Nissan Chemical and NISSAN CHEMICAL 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 NISSAN CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nissan Chemical and NISSAN CHEMICAL.

Diversification Opportunities for Nissan Chemical and NISSAN CHEMICAL

0.97

Correlation Coefficient

Nissan Chemical  NISSAN CHEMICAL

Almost no diversification

The 3 months correlation between Nissan and NISSAN is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Nissan Chemical Corp and NISSAN CHEMICAL IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSAN CHEMICAL IND 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 Corp are associated (or correlated) with NISSAN CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSAN CHEMICAL IND has no effect on the direction of Nissan Chemical i.e., Nissan Chemical and NISSAN CHEMICAL go up and down completely randomly.

Pair Corralation between Nissan Chemical and NISSAN CHEMICAL

Assuming the 90 days trading horizon Nissan Chemical Corp is expected to generate 1.23 times more return on investment than NISSAN CHEMICAL. However, Nissan Chemical is 1.23 times more volatile than NISSAN CHEMICAL IND. It trades about 0.01 of its potential returns per unit of risk. NISSAN CHEMICAL IND is currently generating about 0.0 per unit of risk. If you would invest  3,140  in Nissan Chemical Corp on September 12, 2024 and sell it today you would earn a total of  0.00  from holding Nissan Chemical Corp or generate 0.0% return on investment over 90 days.

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

Nissan Chemical Corp  vs.  NISSAN CHEMICAL IND

Nissan Chemical Corp

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Nissan Chemical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Nissan Chemical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

NISSAN CHEMICAL IND

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days NISSAN CHEMICAL IND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, NISSAN CHEMICAL is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nissan Chemical and NISSAN CHEMICAL

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

The idea behind Nissan Chemical Corp and NISSAN CHEMICAL IND 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.