Correlation Between Mixi and Nintendo
Can any of the company-specific risk be diversified away by investing in both Mixi and Nintendo 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 Mixi and Nintendo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mixi Inc and Nintendo Co ADR, you can compare the effects of market volatilities on Mixi and Nintendo 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 Mixi with a short position of Nintendo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mixi and Nintendo.
Diversification Opportunities for Mixi and Nintendo
Weak diversification
The 3 months correlation between Mixi and Nintendo is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Mixi Inc and Nintendo Co ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nintendo Co ADR and Mixi 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 Mixi Inc are associated (or correlated) with Nintendo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nintendo Co ADR has no effect on the direction of Mixi i.e., Mixi and Nintendo go up and down completely randomly.
Pair Corralation between Mixi and Nintendo
Assuming the 90 days horizon Mixi Inc is expected to under-perform the Nintendo. But the pink sheet apears to be less risky and, when comparing its historical volatility, Mixi Inc is 70.11 times less risky than Nintendo. The pink sheet trades about -0.11 of its potential returns per unit of risk. The Nintendo Co ADR is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,373 in Nintendo Co ADR on August 31, 2024 and sell it today you would earn a total of 92.00 from holding Nintendo Co ADR or generate 6.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 64.57% |
| Values | Daily Returns |
Mixi Inc vs. Nintendo Co ADR
Performance |
| Timeline |
| Mixi Inc |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Nintendo Co ADR |
Mixi and Nintendo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mixi and Nintendo
The main advantage of trading using opposite Mixi and Nintendo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mixi position performs unexpectedly, Nintendo 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 Nintendo will offset losses from the drop in Nintendo's long position.The idea behind Mixi Inc and Nintendo Co ADR 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.| Nintendo vs. Square Enix Holdings | Nintendo vs. Capcom Co Ltd | Nintendo vs. Electronic Arts | Nintendo vs. Roblox Corp |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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