Correlation Between Diamyd Medical and Nippon Telegraph
Can any of the company-specific risk be diversified away by investing in both Diamyd Medical and Nippon Telegraph 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 Diamyd Medical and Nippon Telegraph into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Diamyd Medical AB and Nippon Telegraph and, you can compare the effects of market volatilities on Diamyd Medical and Nippon Telegraph 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 Diamyd Medical with a short position of Nippon Telegraph. Check out your portfolio center. Please also check ongoing floating volatility patterns of Diamyd Medical and Nippon Telegraph.
Diversification Opportunities for Diamyd Medical and Nippon Telegraph
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Diamyd and Nippon is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Diamyd Medical AB and Nippon Telegraph and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Telegraph and Diamyd Medical 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 Diamyd Medical AB are associated (or correlated) with Nippon Telegraph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Telegraph has no effect on the direction of Diamyd Medical i.e., Diamyd Medical and Nippon Telegraph go up and down completely randomly.
Pair Corralation between Diamyd Medical and Nippon Telegraph
Assuming the 90 days horizon Diamyd Medical AB is expected to generate 5.33 times more return on investment than Nippon Telegraph. However, Diamyd Medical is 5.33 times more volatile than Nippon Telegraph and. It trades about 0.21 of its potential returns per unit of risk. Nippon Telegraph and is currently generating about 0.27 per unit of risk. If you would invest 104.00 in Diamyd Medical AB on September 14, 2024 and sell it today you would earn a total of 26.00 from holding Diamyd Medical AB or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Diamyd Medical AB vs. Nippon Telegraph and
Performance |
| Timeline |
| Diamyd Medical AB |
| Nippon Telegraph |
Diamyd Medical and Nippon Telegraph Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Diamyd Medical and Nippon Telegraph
The main advantage of trading using opposite Diamyd Medical and Nippon Telegraph positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Diamyd Medical position performs unexpectedly, Nippon Telegraph 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 Telegraph will offset losses from the drop in Nippon Telegraph's long position.| Diamyd Medical vs. Moderna | Diamyd Medical vs. BioNTech SE | Diamyd Medical vs. Superior Plus Corp | Diamyd Medical vs. SIVERS SEMICONDUCTORS AB |
| Nippon Telegraph vs. STRAYER EDUCATION | Nippon Telegraph vs. DOCDATA | Nippon Telegraph vs. TERADATA | Nippon Telegraph vs. Pure Storage |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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