Correlation Between Nexam Chemical and Diadrom Holding
Can any of the company-specific risk be diversified away by investing in both Nexam Chemical and Diadrom Holding 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 Nexam Chemical and Diadrom Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nexam Chemical Holding and Diadrom Holding AB, you can compare the effects of market volatilities on Nexam Chemical and Diadrom Holding 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 Nexam Chemical with a short position of Diadrom Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexam Chemical and Diadrom Holding.
Diversification Opportunities for Nexam Chemical and Diadrom Holding
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nexam and Diadrom is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Nexam Chemical Holding and Diadrom Holding AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diadrom Holding AB and Nexam 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 Nexam Chemical Holding are associated (or correlated) with Diadrom Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diadrom Holding AB has no effect on the direction of Nexam Chemical i.e., Nexam Chemical and Diadrom Holding go up and down completely randomly.
Pair Corralation between Nexam Chemical and Diadrom Holding
Assuming the 90 days trading horizon Nexam Chemical Holding is expected to generate 0.71 times more return on investment than Diadrom Holding. However, Nexam Chemical Holding is 1.4 times less risky than Diadrom Holding. It trades about -0.02 of its potential returns per unit of risk. Diadrom Holding AB is currently generating about -0.16 per unit of risk. If you would invest 406.00 in Nexam Chemical Holding on September 1, 2024 and sell it today you would lose (7.00) from holding Nexam Chemical Holding or give up 1.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nexam Chemical Holding vs. Diadrom Holding AB
Performance |
| Timeline |
| Nexam Chemical Holding |
| Diadrom Holding AB |
Nexam Chemical and Diadrom Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexam Chemical and Diadrom Holding
The main advantage of trading using opposite Nexam Chemical and Diadrom Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexam Chemical position performs unexpectedly, Diadrom Holding 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 Diadrom Holding will offset losses from the drop in Diadrom Holding's long position.| Nexam Chemical vs. Holmen AB | Nexam Chemical vs. Svenska Cellulosa Aktiebolaget | Nexam Chemical vs. Husqvarna AB | Nexam Chemical vs. Alfa Laval AB |
| Diadrom Holding vs. Enea AB | Diadrom Holding vs. Novotek AB | Diadrom Holding vs. Addnode Group AB | Diadrom Holding vs. Softronic AB |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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