Correlation Between NIKKON HOLDINGS and ALERION CLEANPOWER
Can any of the company-specific risk be diversified away by investing in both NIKKON HOLDINGS and ALERION CLEANPOWER 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 NIKKON HOLDINGS and ALERION CLEANPOWER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIKKON HOLDINGS TD and ALERION CLEANPOWER, you can compare the effects of market volatilities on NIKKON HOLDINGS and ALERION CLEANPOWER 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 NIKKON HOLDINGS with a short position of ALERION CLEANPOWER. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIKKON HOLDINGS and ALERION CLEANPOWER.
Diversification Opportunities for NIKKON HOLDINGS and ALERION CLEANPOWER
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between NIKKON and ALERION is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding NIKKON HOLDINGS TD and ALERION CLEANPOWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALERION CLEANPOWER and NIKKON HOLDINGS 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 NIKKON HOLDINGS TD are associated (or correlated) with ALERION CLEANPOWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALERION CLEANPOWER has no effect on the direction of NIKKON HOLDINGS i.e., NIKKON HOLDINGS and ALERION CLEANPOWER go up and down completely randomly.
Pair Corralation between NIKKON HOLDINGS and ALERION CLEANPOWER
Assuming the 90 days horizon NIKKON HOLDINGS TD is expected to generate 0.43 times more return on investment than ALERION CLEANPOWER. However, NIKKON HOLDINGS TD is 2.33 times less risky than ALERION CLEANPOWER. It trades about 0.3 of its potential returns per unit of risk. ALERION CLEANPOWER is currently generating about 0.03 per unit of risk. If you would invest 1,170 in NIKKON HOLDINGS TD on September 17, 2024 and sell it today you would earn a total of 80.00 from holding NIKKON HOLDINGS TD or generate 6.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NIKKON HOLDINGS TD vs. ALERION CLEANPOWER
Performance |
| Timeline |
| NIKKON HOLDINGS TD |
| ALERION CLEANPOWER |
NIKKON HOLDINGS and ALERION CLEANPOWER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIKKON HOLDINGS and ALERION CLEANPOWER
The main advantage of trading using opposite NIKKON HOLDINGS and ALERION CLEANPOWER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIKKON HOLDINGS position performs unexpectedly, ALERION CLEANPOWER 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 ALERION CLEANPOWER will offset losses from the drop in ALERION CLEANPOWER's long position.| NIKKON HOLDINGS vs. NTG Nordic Transport | NIKKON HOLDINGS vs. Superior Plus Corp | NIKKON HOLDINGS vs. SIVERS SEMICONDUCTORS AB | NIKKON HOLDINGS vs. NorAm Drilling AS |
| ALERION CLEANPOWER vs. PNE AG | ALERION CLEANPOWER vs. Lyxor 1 | ALERION CLEANPOWER vs. Xtrackers ShortDAX | ALERION CLEANPOWER vs. Xtrackers LevDAX |
Check out your portfolio center.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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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