Correlation Between New Oriental and Nomura Holdings
Can any of the company-specific risk be diversified away by investing in both New Oriental 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 New Oriental and Nomura Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Oriental Education and Nomura Holdings, you can compare the effects of market volatilities on New Oriental 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 New Oriental with a short position of Nomura Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Oriental and Nomura Holdings.
Diversification Opportunities for New Oriental and Nomura Holdings
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between New and Nomura is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding New Oriental Education and Nomura Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings and New Oriental 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 New Oriental Education 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 has no effect on the direction of New Oriental i.e., New Oriental and Nomura Holdings go up and down completely randomly.
Pair Corralation between New Oriental and Nomura Holdings
Assuming the 90 days trading horizon New Oriental Education is expected to under-perform the Nomura Holdings. In addition to that, New Oriental is 1.11 times more volatile than Nomura Holdings. It trades about -0.04 of its total potential returns per unit of risk. Nomura Holdings is currently generating about 0.35 per unit of volatility. If you would invest 2,997 in Nomura Holdings on August 26, 2024 and sell it today you would earn a total of 533.00 from holding Nomura Holdings or generate 17.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Oriental Education vs. Nomura Holdings
Performance |
| Timeline |
| New Oriental Education |
| Nomura Holdings |
New Oriental and Nomura Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Oriental and Nomura Holdings
The main advantage of trading using opposite New Oriental and Nomura Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Oriental 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.| New Oriental vs. TAL Education Group | New Oriental vs. Fras le SA | New Oriental vs. Clave Indices De | New Oriental vs. BTG Pactual Logstica |
| Nomura Holdings vs. Waste Management | Nomura Holdings vs. METISA Metalrgica Timboense | Nomura Holdings vs. New Oriental Education | Nomura Holdings vs. Micron Technology |
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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