Correlation Between ITOCHU and NAGOYA RAILROAD
Can any of the company-specific risk be diversified away by investing in both ITOCHU and NAGOYA RAILROAD 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 ITOCHU and NAGOYA RAILROAD into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITOCHU and NAGOYA RAILROAD, you can compare the effects of market volatilities on ITOCHU and NAGOYA RAILROAD 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 ITOCHU with a short position of NAGOYA RAILROAD. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITOCHU and NAGOYA RAILROAD.
Diversification Opportunities for ITOCHU and NAGOYA RAILROAD
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ITOCHU and NAGOYA is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding ITOCHU and NAGOYA RAILROAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NAGOYA RAILROAD and ITOCHU 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 ITOCHU are associated (or correlated) with NAGOYA RAILROAD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NAGOYA RAILROAD has no effect on the direction of ITOCHU i.e., ITOCHU and NAGOYA RAILROAD go up and down completely randomly.
Pair Corralation between ITOCHU and NAGOYA RAILROAD
Assuming the 90 days horizon ITOCHU is expected to under-perform the NAGOYA RAILROAD. But the stock apears to be less risky and, when comparing its historical volatility, ITOCHU is 1.02 times less risky than NAGOYA RAILROAD. The stock trades about -0.08 of its potential returns per unit of risk. The NAGOYA RAILROAD is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,040 in NAGOYA RAILROAD on October 10, 2024 and sell it today you would earn a total of 30.00 from holding NAGOYA RAILROAD or generate 2.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITOCHU vs. NAGOYA RAILROAD
Performance |
| Timeline |
| ITOCHU |
| NAGOYA RAILROAD |
ITOCHU and NAGOYA RAILROAD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITOCHU and NAGOYA RAILROAD
The main advantage of trading using opposite ITOCHU and NAGOYA RAILROAD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITOCHU position performs unexpectedly, NAGOYA RAILROAD 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 NAGOYA RAILROAD will offset losses from the drop in NAGOYA RAILROAD's long position.| ITOCHU vs. CITIC LTD ADR5 | ITOCHU vs. Superior Plus Corp | ITOCHU vs. NMI Holdings | ITOCHU vs. SIVERS SEMICONDUCTORS AB |
| NAGOYA RAILROAD vs. COMBA TELECOM SYST | NAGOYA RAILROAD vs. Cogent Communications Holdings | NAGOYA RAILROAD vs. Spirent Communications plc | NAGOYA RAILROAD vs. Zoom Video Communications |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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