Correlation Between Kajima Corp and Nitto Denko
Can any of the company-specific risk be diversified away by investing in both Kajima Corp and Nitto Denko 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 Kajima Corp and Nitto Denko into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kajima Corp ADR and Nitto Denko Corp, you can compare the effects of market volatilities on Kajima Corp and Nitto Denko 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 Kajima Corp with a short position of Nitto Denko. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kajima Corp and Nitto Denko.
Diversification Opportunities for Kajima Corp and Nitto Denko
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Kajima and Nitto is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Kajima Corp ADR and Nitto Denko Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nitto Denko Corp and Kajima Corp 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 Kajima Corp ADR are associated (or correlated) with Nitto Denko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nitto Denko Corp has no effect on the direction of Kajima Corp i.e., Kajima Corp and Nitto Denko go up and down completely randomly.
Pair Corralation between Kajima Corp and Nitto Denko
Assuming the 90 days horizon Kajima Corp is expected to generate 7.01 times less return on investment than Nitto Denko. In addition to that, Kajima Corp is 1.88 times more volatile than Nitto Denko Corp. It trades about 0.0 of its total potential returns per unit of risk. Nitto Denko Corp is currently generating about 0.05 per unit of volatility. If you would invest 1,635 in Nitto Denko Corp on November 2, 2024 and sell it today you would earn a total of 147.00 from holding Nitto Denko Corp or generate 8.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kajima Corp ADR vs. Nitto Denko Corp
Performance |
| Timeline |
| Kajima Corp ADR |
| Nitto Denko Corp |
Kajima Corp and Nitto Denko Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kajima Corp and Nitto Denko
The main advantage of trading using opposite Kajima Corp and Nitto Denko positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kajima Corp position performs unexpectedly, Nitto Denko 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 Nitto Denko will offset losses from the drop in Nitto Denko's long position.| Kajima Corp vs. ACS Actividades De | Kajima Corp vs. IES Holdings | Kajima Corp vs. Acciona SA | Kajima Corp vs. JGC Corp |
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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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