Correlation Between China Eastern and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both China Eastern and Nomura 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 China Eastern and Nomura Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Eastern Airlines and Nomura Holdings ADR, you can compare the effects of market volatilities on China Eastern and Nomura 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 China Eastern with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Eastern and Nomura Holdings.
Diversification Opportunities for China Eastern and Nomura Holdings
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between China and Nomura is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding China Eastern Airlines and Nomura Holdings ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings ADR and China Eastern 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 China Eastern Airlines are associated (or correlated) with Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings ADR has no effect on the direction of China Eastern i.e., China Eastern and Nomura Holdings go up and down completely randomly.
Pair Corralation between China Eastern and Nomura Holdings
If you would invest 526.00 in Nomura Holdings ADR on August 30, 2024 and sell it today you would earn a total of 67.00 from holding Nomura Holdings ADR or generate 12.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 4.55% |
| Values | Daily Returns |
China Eastern Airlines vs. Nomura Holdings ADR
Performance |
| Timeline |
| China Eastern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Nomura Holdings ADR |
China Eastern and Nomura Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Eastern and Nomura Holdings
The main advantage of trading using opposite China Eastern and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Eastern position performs unexpectedly, Nomura 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 Nomura Holdings will offset losses from the drop in Nomura Holdings' long position.| China Eastern vs. Alta Equipment Group | China Eastern vs. Triton International Limited | China Eastern vs. Semtech | China Eastern vs. Vestis |
| Nomura Holdings vs. Perella Weinberg Partners | Nomura Holdings vs. Oppenheimer Holdings | Nomura Holdings vs. Stifel Financial Corp | Nomura Holdings vs. Piper Sandler Companies |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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