Correlation Between Capri Holdings and Nippon Life

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Can any of the company-specific risk be diversified away by investing in both Capri Holdings and Nippon Life 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 Capri Holdings and Nippon Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capri Holdings and Nippon Life India, you can compare the effects of market volatilities on Capri Holdings and Nippon Life 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 Capri Holdings with a short position of Nippon Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capri Holdings and Nippon Life.

Diversification Opportunities for Capri Holdings and Nippon Life

-0.49
  Correlation Coefficient

Very good diversification

The 3 months correlation between Capri and Nippon is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Capri Holdings and Nippon Life India in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Life India and Capri 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 Capri Holdings are associated (or correlated) with Nippon Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Life India has no effect on the direction of Capri Holdings i.e., Capri Holdings and Nippon Life go up and down completely randomly.

Pair Corralation between Capri Holdings and Nippon Life

Given the investment horizon of 90 days Capri Holdings is expected to under-perform the Nippon Life. In addition to that, Capri Holdings is 1.74 times more volatile than Nippon Life India. It trades about -0.01 of its total potential returns per unit of risk. Nippon Life India is currently generating about 0.14 per unit of volatility. If you would invest  22,813  in Nippon Life India on September 2, 2024 and sell it today you would earn a total of  45,737  from holding Nippon Life India or generate 200.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy98.12%
ValuesDaily Returns

Capri Holdings  vs.  Nippon Life India

 Performance 
       Timeline  
Capri Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Capri Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
Nippon Life India 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Life India are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Nippon Life is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Capri Holdings and Nippon Life Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Capri Holdings and Nippon Life

The main advantage of trading using opposite Capri Holdings and Nippon Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capri Holdings position performs unexpectedly, Nippon Life 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 Nippon Life will offset losses from the drop in Nippon Life's long position.
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The idea behind Capri Holdings and Nippon Life India pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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