Correlation Between KINGBOARD CHEMICAL and Nissan Chemical
Can any of the company-specific risk be diversified away by investing in both KINGBOARD CHEMICAL and Nissan 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 KINGBOARD CHEMICAL and Nissan Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between KINGBOARD CHEMICAL and Nissan Chemical Corp, you can compare the effects of market volatilities on KINGBOARD CHEMICAL and Nissan 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 KINGBOARD CHEMICAL with a short position of Nissan Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of KINGBOARD CHEMICAL and Nissan Chemical.
Diversification Opportunities for KINGBOARD CHEMICAL and Nissan Chemical
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between KINGBOARD and Nissan is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding KINGBOARD CHEMICAL and Nissan Chemical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nissan Chemical Corp and KINGBOARD CHEMICAL 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 KINGBOARD CHEMICAL are associated (or correlated) with Nissan Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nissan Chemical Corp has no effect on the direction of KINGBOARD CHEMICAL i.e., KINGBOARD CHEMICAL and Nissan Chemical go up and down completely randomly.
Pair Corralation between KINGBOARD CHEMICAL and Nissan Chemical
Assuming the 90 days trading horizon KINGBOARD CHEMICAL is expected to generate 1.99 times more return on investment than Nissan Chemical. However, KINGBOARD CHEMICAL is 1.99 times more volatile than Nissan Chemical Corp. It trades about 0.05 of its potential returns per unit of risk. Nissan Chemical Corp is currently generating about -0.03 per unit of risk. If you would invest 116.00 in KINGBOARD CHEMICAL on September 25, 2024 and sell it today you would earn a total of 108.00 from holding KINGBOARD CHEMICAL or generate 93.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
KINGBOARD CHEMICAL vs. Nissan Chemical Corp
Performance |
| Timeline |
| KINGBOARD CHEMICAL |
| Nissan Chemical Corp |
KINGBOARD CHEMICAL and Nissan Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with KINGBOARD CHEMICAL and Nissan Chemical
The main advantage of trading using opposite KINGBOARD CHEMICAL and Nissan Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KINGBOARD CHEMICAL position performs unexpectedly, Nissan 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 Nissan Chemical will offset losses from the drop in Nissan Chemical's long position.| KINGBOARD CHEMICAL vs. Tradegate AG Wertpapierhandelsbank | KINGBOARD CHEMICAL vs. ETFS Coffee ETC | KINGBOARD CHEMICAL vs. ALIOR BANK | KINGBOARD CHEMICAL vs. Luckin Coffee |
| Nissan Chemical vs. Apple Inc | Nissan Chemical vs. Apple Inc | Nissan Chemical vs. Apple Inc | Nissan Chemical vs. Apple Inc |
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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