Correlation Between Mendus AB and Nexam Chemical
Can any of the company-specific risk be diversified away by investing in both Mendus AB and Nexam Chemical 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 Mendus AB and Nexam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mendus AB and Nexam Chemical Holding, you can compare the effects of market volatilities on Mendus AB and Nexam Chemical 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 Mendus AB with a short position of Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mendus AB and Nexam Chemical.
Diversification Opportunities for Mendus AB and Nexam Chemical
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Mendus and Nexam is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Mendus AB and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding and Mendus AB 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 Mendus AB are associated (or correlated) with Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of Mendus AB i.e., Mendus AB and Nexam Chemical go up and down completely randomly.
Pair Corralation between Mendus AB and Nexam Chemical
Assuming the 90 days trading horizon Mendus AB is expected to under-perform the Nexam Chemical. In addition to that, Mendus AB is 1.25 times more volatile than Nexam Chemical Holding. It trades about -0.19 of its total potential returns per unit of risk. Nexam Chemical Holding is currently generating about -0.08 per unit of volatility. If you would invest 440.00 in Nexam Chemical Holding on August 26, 2024 and sell it today you would lose (21.00) from holding Nexam Chemical Holding or give up 4.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mendus AB vs. Nexam Chemical Holding
Performance |
| Timeline |
| Mendus AB |
| Nexam Chemical Holding |
Mendus AB and Nexam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mendus AB and Nexam Chemical
The main advantage of trading using opposite Mendus AB and Nexam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mendus AB position performs unexpectedly, Nexam Chemical 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 Nexam Chemical will offset losses from the drop in Nexam Chemical's long position.The idea behind Mendus AB and Nexam Chemical Holding 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.| Nexam Chemical vs. Svenska Aerogel Holding | Nexam Chemical vs. Kancera AB | Nexam Chemical vs. BIMobject AB | Nexam Chemical vs. KABE Group AB |
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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