Correlation Between Nippon Steel and Lion One
Can any of the company-specific risk be diversified away by investing in both Nippon Steel and Lion One 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 Nippon Steel and Lion One into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nippon Steel and Lion One Metals, you can compare the effects of market volatilities on Nippon Steel and Lion One 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 Nippon Steel with a short position of Lion One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Steel and Lion One.
Diversification Opportunities for Nippon Steel and Lion One
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nippon and Lion is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Steel and Lion One Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lion One Metals and Nippon Steel 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 Nippon Steel are associated (or correlated) with Lion One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lion One Metals has no effect on the direction of Nippon Steel i.e., Nippon Steel and Lion One go up and down completely randomly.
Pair Corralation between Nippon Steel and Lion One
Assuming the 90 days trading horizon Nippon Steel is expected to generate 0.29 times more return on investment than Lion One. However, Nippon Steel is 3.43 times less risky than Lion One. It trades about -0.05 of its potential returns per unit of risk. Lion One Metals is currently generating about -0.02 per unit of risk. If you would invest 1,976 in Nippon Steel on September 3, 2024 and sell it today you would lose (65.00) from holding Nippon Steel or give up 3.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nippon Steel vs. Lion One Metals
Performance |
| Timeline |
| Nippon Steel |
| Lion One Metals |
Nippon Steel and Lion One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nippon Steel and Lion One
The main advantage of trading using opposite Nippon Steel and Lion One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nippon Steel position performs unexpectedly, Lion One 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 Lion One will offset losses from the drop in Lion One's long position.| Nippon Steel vs. MAGNUM MINING EXP | Nippon Steel vs. Perseus Mining Limited | Nippon Steel vs. Apollo Medical Holdings | Nippon Steel vs. G III Apparel Group |
| Lion One vs. Cars Inc | Lion One vs. Chunghwa Telecom Co | Lion One vs. United Internet AG | Lion One vs. JAPAN TOBACCO UNSPADR12 |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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