Correlation Between SEIKO EPSON and Nano Dimension

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

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

Diversification Opportunities for SEIKO EPSON and Nano Dimension

0.55

Correlation Coefficient

SEIKO EPSON  Nano Dimension

Very weak diversification

The 3 months correlation between SEIKO and Nano is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding SEIKO EPSON PADR and Nano Dimension in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nano Dimension and SEIKO EPSON 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 SEIKO EPSON PADR are associated (or correlated) with Nano Dimension. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nano Dimension has no effect on the direction of SEIKO EPSON i.e., SEIKO EPSON and Nano Dimension go up and down completely randomly.

Pair Corralation between SEIKO EPSON and Nano Dimension

Assuming the 90 days trading horizon SEIKO EPSON is expected to generate 3.17 times less return on investment than Nano Dimension. But when comparing it to its historical volatility, SEIKO EPSON PADR is 1.91 times less risky than Nano Dimension. It trades about 0.05 of its potential returns per unit of risk. Nano Dimension is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  198.00  in Nano Dimension on September 23, 2024 and sell it today you would earn a total of  34.00  from holding Nano Dimension or generate 17.17% return on investment over 90 days.

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

SEIKO EPSON PADR  vs.  Nano Dimension

SEIKO EPSON PADR

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SEIKO EPSON PADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SEIKO EPSON is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nano Dimension

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Nano Dimension are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nano Dimension reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SEIKO EPSON and Nano Dimension

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

The idea behind SEIKO EPSON PADR and Nano Dimension 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.