Correlation Between Arkema SA and Nitto Denko
Can any of the company-specific risk be diversified away by investing in both Arkema SA and Nitto Denko 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 Arkema SA and Nitto Denko into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Arkema SA ADR and Nitto Denko Corp, you can compare the effects of market volatilities on Arkema SA and Nitto Denko 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 Arkema SA with a short position of Nitto Denko. Check out your portfolio center. Please also check ongoing floating volatility patterns of Arkema SA and Nitto Denko.
Diversification Opportunities for Arkema SA and Nitto Denko
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Arkema and Nitto is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Arkema SA ADR and Nitto Denko Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nitto Denko Corp and Arkema SA 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 Arkema SA ADR are associated (or correlated) with Nitto Denko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nitto Denko Corp has no effect on the direction of Arkema SA i.e., Arkema SA and Nitto Denko go up and down completely randomly.
Pair Corralation between Arkema SA and Nitto Denko
Assuming the 90 days horizon Arkema SA ADR is expected to under-perform the Nitto Denko. In addition to that, Arkema SA is 1.02 times more volatile than Nitto Denko Corp. It trades about -0.27 of its total potential returns per unit of risk. Nitto Denko Corp is currently generating about -0.07 per unit of volatility. If you would invest 1,638 in Nitto Denko Corp on September 1, 2024 and sell it today you would lose (43.00) from holding Nitto Denko Corp or give up 2.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Arkema SA ADR vs. Nitto Denko Corp
Performance |
| Timeline |
| Arkema SA ADR |
| Nitto Denko Corp |
Arkema SA and Nitto Denko Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Arkema SA and Nitto Denko
The main advantage of trading using opposite Arkema SA and Nitto Denko positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Arkema SA position performs unexpectedly, Nitto Denko 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 Nitto Denko will offset losses from the drop in Nitto Denko's long position.| Arkema SA vs. Akzo Nobel NV | Arkema SA vs. Avoca LLC | Arkema SA vs. AGC Inc ADR | Arkema SA vs. AirBoss of America |
| Nitto Denko vs. Sherwin Williams Co | Nitto Denko vs. Air Liquide SA | Nitto Denko vs. Air Products and | Nitto Denko vs. Ecolab Inc |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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