Correlation Between SP Global and Nippon Light
Can any of the company-specific risk be diversified away by investing in both SP Global and Nippon Light 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 SP Global and Nippon Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SP Global and Nippon Light Metal, you can compare the effects of market volatilities on SP Global and Nippon Light 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 SP Global with a short position of Nippon Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of SP Global and Nippon Light.
Diversification Opportunities for SP Global and Nippon Light
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between MHL and Nippon is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding SP Global and Nippon Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Light Metal and SP Global 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 SP Global are associated (or correlated) with Nippon Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Light Metal has no effect on the direction of SP Global i.e., SP Global and Nippon Light go up and down completely randomly.
Pair Corralation between SP Global and Nippon Light
Assuming the 90 days horizon SP Global is expected to under-perform the Nippon Light. But the stock apears to be less risky and, when comparing its historical volatility, SP Global is 1.34 times less risky than Nippon Light. The stock trades about -0.06 of its potential returns per unit of risk. The Nippon Light Metal is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 920.00 in Nippon Light Metal on October 15, 2024 and sell it today you would lose (10.00) from holding Nippon Light Metal or give up 1.09% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SP Global vs. Nippon Light Metal
Performance |
| Timeline |
| SP Global |
| Nippon Light Metal |
SP Global and Nippon Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SP Global and Nippon Light
The main advantage of trading using opposite SP Global and Nippon Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SP Global position performs unexpectedly, Nippon Light 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 Nippon Light will offset losses from the drop in Nippon Light's long position.| SP Global vs. Nippon Light Metal | SP Global vs. DAIDO METAL TD | SP Global vs. 24SEVENOFFICE GROUP AB | SP Global vs. CAIRN HOMES EO |
| Nippon Light vs. DATATEC LTD 2 | Nippon Light vs. Hyrican Informationssysteme Aktiengesellschaft | Nippon Light vs. Fast Retailing Co | Nippon Light vs. RETAIL FOOD GROUP |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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