Correlation Between Nexam Chemical and Lipum AB
Can any of the company-specific risk be diversified away by investing in both Nexam Chemical and Lipum AB 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 Lipum AB 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 Lipum AB, you can compare the effects of market volatilities on Nexam Chemical and Lipum AB 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 Lipum AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexam Chemical and Lipum AB.
Diversification Opportunities for Nexam Chemical and Lipum AB
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nexam and Lipum is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Nexam Chemical Holding and Lipum AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lipum 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 Lipum AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lipum AB has no effect on the direction of Nexam Chemical i.e., Nexam Chemical and Lipum AB go up and down completely randomly.
Pair Corralation between Nexam Chemical and Lipum AB
Assuming the 90 days trading horizon Nexam Chemical Holding is expected to under-perform the Lipum AB. But the stock apears to be less risky and, when comparing its historical volatility, Nexam Chemical Holding is 1.1 times less risky than Lipum AB. The stock trades about -0.05 of its potential returns per unit of risk. The Lipum AB is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 1,450 in Lipum AB on August 31, 2024 and sell it today you would earn a total of 170.00 from holding Lipum AB or generate 11.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nexam Chemical Holding vs. Lipum AB
Performance |
| Timeline |
| Nexam Chemical Holding |
| Lipum AB |
Nexam Chemical and Lipum AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nexam Chemical and Lipum AB
The main advantage of trading using opposite Nexam Chemical and Lipum AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nexam Chemical position performs unexpectedly, Lipum AB 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 Lipum AB will offset losses from the drop in Lipum AB's long position.| Nexam Chemical vs. Polygiene AB | Nexam Chemical vs. Svenska Aerogel Holding | Nexam Chemical vs. Organoclick AB | Nexam Chemical vs. Kancera AB |
| Lipum AB vs. Ascelia Pharma AB | Lipum AB vs. NextCell Pharma AB | Lipum AB vs. Annexin Pharmaceuticals AB | Lipum AB vs. AlzeCure Pharma |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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