Correlation Between Nel ASA and Nidec
Can any of the company-specific risk be diversified away by investing in both Nel ASA and Nidec 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 Nel ASA and Nidec into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nel ASA and Nidec, you can compare the effects of market volatilities on Nel ASA and Nidec 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 Nel ASA with a short position of Nidec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nel ASA and Nidec.
Diversification Opportunities for Nel ASA and Nidec
Very weak diversification
The 3 months correlation between Nel and Nidec is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Nel ASA and Nidec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nidec and Nel ASA 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 Nel ASA are associated (or correlated) with Nidec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nidec has no effect on the direction of Nel ASA i.e., Nel ASA and Nidec go up and down completely randomly.
Pair Corralation between Nel ASA and Nidec
If you would invest 1,360 in Nidec on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Nidec or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 4.55% |
| Values | Daily Returns |
Nel ASA vs. Nidec
Performance |
| Timeline |
| Nel ASA |
| Nidec |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nel ASA and Nidec Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nel ASA and Nidec
The main advantage of trading using opposite Nel ASA and Nidec positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nel ASA position performs unexpectedly, Nidec 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 Nidec will offset losses from the drop in Nidec's long position.The idea behind Nel ASA and Nidec 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.| Nidec vs. Daifuku Co | Nidec vs. Eaton PLC | Nidec vs. Yokogawa Electric Corp | Nidec vs. Brewbilt Manufacturing |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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