Correlation Between Nishi Nippon and SBM OFFSHORE
Can any of the company-specific risk be diversified away by investing in both Nishi Nippon and SBM OFFSHORE 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 Nishi Nippon and SBM OFFSHORE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nishi Nippon Railroad Co and SBM OFFSHORE, you can compare the effects of market volatilities on Nishi Nippon and SBM OFFSHORE 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 Nishi Nippon with a short position of SBM OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nishi Nippon and SBM OFFSHORE.
Diversification Opportunities for Nishi Nippon and SBM OFFSHORE
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nishi and SBM is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Nishi Nippon Railroad Co and SBM OFFSHORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SBM OFFSHORE and Nishi Nippon 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 Nishi Nippon Railroad Co are associated (or correlated) with SBM OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SBM OFFSHORE has no effect on the direction of Nishi Nippon i.e., Nishi Nippon and SBM OFFSHORE go up and down completely randomly.
Pair Corralation between Nishi Nippon and SBM OFFSHORE
Assuming the 90 days horizon Nishi Nippon Railroad Co is expected to generate 0.92 times more return on investment than SBM OFFSHORE. However, Nishi Nippon Railroad Co is 1.09 times less risky than SBM OFFSHORE. It trades about 0.29 of its potential returns per unit of risk. SBM OFFSHORE is currently generating about 0.21 per unit of risk. If you would invest 1,290 in Nishi Nippon Railroad Co on August 25, 2024 and sell it today you would earn a total of 140.00 from holding Nishi Nippon Railroad Co or generate 10.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Nishi Nippon Railroad Co vs. SBM OFFSHORE
Performance |
| Timeline |
| Nishi Nippon Railroad |
| SBM OFFSHORE |
Nishi Nippon and SBM OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nishi Nippon and SBM OFFSHORE
The main advantage of trading using opposite Nishi Nippon and SBM OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nishi Nippon position performs unexpectedly, SBM OFFSHORE 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 SBM OFFSHORE will offset losses from the drop in SBM OFFSHORE's long position.| Nishi Nippon vs. CRRC Limited | Nishi Nippon vs. Central Japan Railway | Nishi Nippon vs. Westinghouse Air Brake | Nishi Nippon vs. Superior Plus Corp |
| SBM OFFSHORE vs. Vulcan Materials | SBM OFFSHORE vs. Goodyear Tire Rubber | SBM OFFSHORE vs. Penn National Gaming | SBM OFFSHORE vs. THRACE PLASTICS |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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