Correlation Between Nexam Chemical and Lifeclean International
Can any of the company-specific risk be diversified away by investing in both Nexam Chemical and Lifeclean International 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 Lifeclean International 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 Lifeclean International AB, you can compare the effects of market volatilities on Nexam Chemical and Lifeclean International 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 Lifeclean International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexam Chemical and Lifeclean International.
Diversification Opportunities for Nexam Chemical and Lifeclean International
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nexam and Lifeclean is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Nexam Chemical Holding and Lifeclean International AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lifeclean International 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 Lifeclean International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lifeclean International has no effect on the direction of Nexam Chemical i.e., Nexam Chemical and Lifeclean International go up and down completely randomly.
Pair Corralation between Nexam Chemical and Lifeclean International
Assuming the 90 days trading horizon Nexam Chemical Holding is expected to generate 0.67 times more return on investment than Lifeclean International. However, Nexam Chemical Holding is 1.5 times less risky than Lifeclean International. It trades about 0.08 of its potential returns per unit of risk. Lifeclean International AB is currently generating about -0.13 per unit of risk. If you would invest 305.00 in Nexam Chemical Holding on September 1, 2024 and sell it today you would earn a total of 94.00 from holding Nexam Chemical Holding or generate 30.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nexam Chemical Holding vs. Lifeclean International AB
Performance |
| Timeline |
| Nexam Chemical Holding |
| Lifeclean International |
Nexam Chemical and Lifeclean International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexam Chemical and Lifeclean International
The main advantage of trading using opposite Nexam Chemical and Lifeclean International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexam Chemical position performs unexpectedly, Lifeclean International 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 Lifeclean International will offset losses from the drop in Lifeclean International'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 |
| Lifeclean International vs. Mendus AB | Lifeclean International vs. JonDeTech Sensors | Lifeclean International vs. Nexam Chemical Holding | Lifeclean International vs. Lohilo Foods 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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