Correlation Between Nomura Holdings and China Eastern
Can any of the company-specific risk be diversified away by investing in both Nomura Holdings and China Eastern 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 Nomura Holdings and China Eastern into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomura Holdings ADR and China Eastern Airlines, you can compare the effects of market volatilities on Nomura Holdings and China Eastern 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 Nomura Holdings with a short position of China Eastern. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Holdings and China Eastern.
Diversification Opportunities for Nomura Holdings and China Eastern
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nomura and China is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings ADR and China Eastern Airlines in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Eastern Airlines and Nomura Holdings 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 Nomura Holdings ADR are associated (or correlated) with China Eastern. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Eastern Airlines has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and China Eastern go up and down completely randomly.
Pair Corralation between Nomura Holdings and China Eastern
If you would invest 550.00 in Nomura Holdings ADR on August 25, 2024 and sell it today you would earn a total of 55.00 from holding Nomura Holdings ADR or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 2.22% |
| Values | Daily Returns |
Nomura Holdings ADR vs. China Eastern Airlines
Performance |
| Timeline |
| Nomura Holdings ADR |
| China Eastern Airlines |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nomura Holdings and China Eastern Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomura Holdings and China Eastern
The main advantage of trading using opposite Nomura Holdings and China Eastern positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomura Holdings position performs unexpectedly, China Eastern 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 China Eastern will offset losses from the drop in China Eastern's long position.| Nomura Holdings vs. Perella Weinberg Partners | Nomura Holdings vs. Oppenheimer Holdings | Nomura Holdings vs. Stifel Financial Corp | Nomura Holdings vs. Piper Sandler Companies |
| China Eastern vs. Nomura Holdings ADR | China Eastern vs. Jeld Wen Holding | China Eastern vs. Highway Holdings Limited | China Eastern vs. Morgan Stanley |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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