Correlation Between Nomura Holdings and Western Acquisition

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Can any of the company-specific risk be diversified away by investing in both Nomura Holdings and Western Acquisition 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 Western Acquisition 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 Western Acquisition Ventures, you can compare the effects of market volatilities on Nomura Holdings and Western Acquisition 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 Western Acquisition. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Holdings and Western Acquisition.

Diversification Opportunities for Nomura Holdings and Western Acquisition

-0.26
  Correlation Coefficient

Very good diversification

The 3 months correlation between Nomura and Western is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings ADR and Western Acquisition Ventures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Acquisition 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 Western Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Acquisition has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Western Acquisition go up and down completely randomly.

Pair Corralation between Nomura Holdings and Western Acquisition

Considering the 90-day investment horizon Nomura Holdings ADR is expected to generate 0.74 times more return on investment than Western Acquisition. However, Nomura Holdings ADR is 1.36 times less risky than Western Acquisition. It trades about 0.18 of its potential returns per unit of risk. Western Acquisition Ventures is currently generating about 0.04 per unit of risk. If you would invest  522.00  in Nomura Holdings ADR on August 30, 2024 and sell it today you would earn a total of  71.00  from holding Nomura Holdings ADR or generate 13.6% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Nomura Holdings ADR  vs.  Western Acquisition Ventures

 Performance 
       Timeline  
Nomura Holdings ADR 

Risk-Adjusted Performance

1 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable primary indicators, Nomura Holdings is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.
Western Acquisition 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Western Acquisition Ventures are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Western Acquisition is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Nomura Holdings and Western Acquisition Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nomura Holdings and Western Acquisition

The main advantage of trading using opposite Nomura Holdings and Western Acquisition positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomura Holdings position performs unexpectedly, Western Acquisition 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 Western Acquisition will offset losses from the drop in Western Acquisition's long position.
The idea behind Nomura Holdings ADR and Western Acquisition Ventures 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.
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.

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