Correlation Between NN and Teijin
Can any of the company-specific risk be diversified away by investing in both NN and Teijin 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 NN and Teijin into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NN Inc and Teijin, you can compare the effects of market volatilities on NN and Teijin 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 NN with a short position of Teijin. Check out your portfolio center. Please also check ongoing floating volatility patterns of NN and Teijin.
Diversification Opportunities for NN and Teijin
Significant diversification
The 3 months correlation between NN and Teijin is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding NN Inc and Teijin in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teijin and NN 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 NN Inc are associated (or correlated) with Teijin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teijin has no effect on the direction of NN i.e., NN and Teijin go up and down completely randomly.
Pair Corralation between NN and Teijin
Given the investment horizon of 90 days NN Inc is expected to generate 4.2 times more return on investment than Teijin. However, NN is 4.2 times more volatile than Teijin. It trades about 0.03 of its potential returns per unit of risk. Teijin is currently generating about -0.25 per unit of risk. If you would invest 392.00 in NN Inc on August 31, 2024 and sell it today you would lose (1.00) from holding NN Inc or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NN Inc vs. Teijin
Performance |
| Timeline |
| NN Inc |
| Teijin |
NN and Teijin Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NN and Teijin
The main advantage of trading using opposite NN and Teijin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NN position performs unexpectedly, Teijin 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 Teijin will offset losses from the drop in Teijin's long position.| NN vs. Steel Partners Holdings | NN vs. Compass Diversified | NN vs. Brookfield Business Partners | NN vs. Matthews International |
| Teijin vs. Toray Industries ADR | Teijin vs. Nitto Denko Corp | Teijin vs. NSK Ltd ADR | Teijin vs. Secom Co Ltd |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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