Correlation Between NEXCOM International and Sesoda Corp
Can any of the company-specific risk be diversified away by investing in both NEXCOM International and Sesoda Corp 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 NEXCOM International and Sesoda Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NEXCOM International Co and Sesoda Corp, you can compare the effects of market volatilities on NEXCOM International and Sesoda Corp 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 NEXCOM International with a short position of Sesoda Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of NEXCOM International and Sesoda Corp.
Diversification Opportunities for NEXCOM International and Sesoda Corp
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between NEXCOM and Sesoda is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding NEXCOM International Co and Sesoda Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sesoda Corp and NEXCOM International 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 NEXCOM International Co are associated (or correlated) with Sesoda Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sesoda Corp has no effect on the direction of NEXCOM International i.e., NEXCOM International and Sesoda Corp go up and down completely randomly.
Pair Corralation between NEXCOM International and Sesoda Corp
Assuming the 90 days trading horizon NEXCOM International Co is expected to under-perform the Sesoda Corp. In addition to that, NEXCOM International is 1.1 times more volatile than Sesoda Corp. It trades about -0.09 of its total potential returns per unit of risk. Sesoda Corp is currently generating about 0.06 per unit of volatility. If you would invest 3,945 in Sesoda Corp on September 3, 2024 and sell it today you would earn a total of 235.00 from holding Sesoda Corp or generate 5.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NEXCOM International Co vs. Sesoda Corp
Performance |
| Timeline |
| NEXCOM International |
| Sesoda Corp |
NEXCOM International and Sesoda Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NEXCOM International and Sesoda Corp
The main advantage of trading using opposite NEXCOM International and Sesoda Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NEXCOM International position performs unexpectedly, Sesoda Corp 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 Sesoda Corp will offset losses from the drop in Sesoda Corp's long position.| NEXCOM International vs. Sesoda Corp | NEXCOM International vs. Oceanic Beverages Co | NEXCOM International vs. U Ming Marine Transport | NEXCOM International vs. CHC Healthcare Group |
| Sesoda Corp vs. Formosa Plastics Corp | Sesoda Corp vs. Formosa Petrochemical Corp | Sesoda Corp vs. Cathay Financial Holding |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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