Correlation Between Nippon Light and EHEALTH
Can any of the company-specific risk be diversified away by investing in both Nippon Light and EHEALTH 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 Nippon Light and EHEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nippon Light Metal and EHEALTH, you can compare the effects of market volatilities on Nippon Light and EHEALTH 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 Nippon Light with a short position of EHEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Light and EHEALTH.
Diversification Opportunities for Nippon Light and EHEALTH
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nippon and EHEALTH is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Light Metal and EHEALTH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EHEALTH and Nippon Light 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 Nippon Light Metal are associated (or correlated) with EHEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EHEALTH has no effect on the direction of Nippon Light i.e., Nippon Light and EHEALTH go up and down completely randomly.
Pair Corralation between Nippon Light and EHEALTH
Assuming the 90 days horizon Nippon Light is expected to generate 6.34 times less return on investment than EHEALTH. But when comparing it to its historical volatility, Nippon Light Metal is 2.16 times less risky than EHEALTH. It trades about 0.11 of its potential returns per unit of risk. EHEALTH is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 763.00 in EHEALTH on October 20, 2024 and sell it today you would earn a total of 181.00 from holding EHEALTH or generate 23.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nippon Light Metal vs. EHEALTH
Performance |
| Timeline |
| Nippon Light Metal |
| EHEALTH |
Nippon Light and EHEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nippon Light and EHEALTH
The main advantage of trading using opposite Nippon Light and EHEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Light position performs unexpectedly, EHEALTH 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 EHEALTH will offset losses from the drop in EHEALTH's long position.| Nippon Light vs. Discover Financial Services | Nippon Light vs. MTY Food Group | Nippon Light vs. Direct Line Insurance | Nippon Light vs. EBRO FOODS |
| EHEALTH vs. Nippon Light Metal | EHEALTH vs. GWILLI FOOD | EHEALTH vs. Austevoll Seafood ASA | EHEALTH vs. ADRIATIC METALS LS 013355 |
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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