Correlation Between AOYAMA TRADING and NMI Holdings
Can any of the company-specific risk be diversified away by investing in both AOYAMA TRADING and NMI Holdings 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 AOYAMA TRADING and NMI Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AOYAMA TRADING and NMI Holdings, you can compare the effects of market volatilities on AOYAMA TRADING and NMI Holdings 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 AOYAMA TRADING with a short position of NMI Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of AOYAMA TRADING and NMI Holdings.
Diversification Opportunities for AOYAMA TRADING and NMI Holdings
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between AOYAMA and NMI is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding AOYAMA TRADING and NMI Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NMI Holdings and AOYAMA TRADING 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 AOYAMA TRADING are associated (or correlated) with NMI Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NMI Holdings has no effect on the direction of AOYAMA TRADING i.e., AOYAMA TRADING and NMI Holdings go up and down completely randomly.
Pair Corralation between AOYAMA TRADING and NMI Holdings
Assuming the 90 days horizon AOYAMA TRADING is expected to generate 3.31 times more return on investment than NMI Holdings. However, AOYAMA TRADING is 3.31 times more volatile than NMI Holdings. It trades about 0.37 of its potential returns per unit of risk. NMI Holdings is currently generating about 0.05 per unit of risk. If you would invest 780.00 in AOYAMA TRADING on August 28, 2024 and sell it today you would earn a total of 570.00 from holding AOYAMA TRADING or generate 73.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AOYAMA TRADING vs. NMI Holdings
Performance |
| Timeline |
| AOYAMA TRADING |
| NMI Holdings |
AOYAMA TRADING and NMI Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AOYAMA TRADING and NMI Holdings
The main advantage of trading using opposite AOYAMA TRADING and NMI Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AOYAMA TRADING position performs unexpectedly, NMI Holdings 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 NMI Holdings will offset losses from the drop in NMI Holdings' long position.| AOYAMA TRADING vs. Magnachip Semiconductor | AOYAMA TRADING vs. Grupo Carso SAB | AOYAMA TRADING vs. SIEM OFFSHORE NEW | AOYAMA TRADING vs. ELMOS SEMICONDUCTOR |
| NMI Holdings vs. CSSC Offshore Marine | NMI Holdings vs. SIEM OFFSHORE NEW | NMI Holdings vs. PARKEN Sport Entertainment | NMI Holdings vs. SK TELECOM TDADR |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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