Correlation Between NIPPON STEEL and Takkt AG
Can any of the company-specific risk be diversified away by investing in both NIPPON STEEL and Takkt AG 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 Takkt AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NIPPON STEEL SPADR and Takkt AG, you can compare the effects of market volatilities on NIPPON STEEL and Takkt AG 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 Takkt AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIPPON STEEL and Takkt AG.
Diversification Opportunities for NIPPON STEEL and Takkt AG
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between NIPPON and Takkt is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding NIPPON STEEL SPADR and Takkt AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Takkt AG 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 SPADR are associated (or correlated) with Takkt AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Takkt AG has no effect on the direction of NIPPON STEEL i.e., NIPPON STEEL and Takkt AG go up and down completely randomly.
Pair Corralation between NIPPON STEEL and Takkt AG
Assuming the 90 days trading horizon NIPPON STEEL SPADR is expected to generate 5.48 times more return on investment than Takkt AG. However, NIPPON STEEL is 5.48 times more volatile than Takkt AG. It trades about 0.04 of its potential returns per unit of risk. Takkt AG is currently generating about -0.04 per unit of risk. If you would invest 462.00 in NIPPON STEEL SPADR on September 10, 2024 and sell it today you would earn a total of 148.00 from holding NIPPON STEEL SPADR or generate 32.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.8% |
| Values | Daily Returns |
NIPPON STEEL SPADR vs. Takkt AG
Performance |
| Timeline |
| NIPPON STEEL SPADR |
| Takkt AG |
NIPPON STEEL and Takkt AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NIPPON STEEL and Takkt AG
The main advantage of trading using opposite NIPPON STEEL and Takkt AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NIPPON STEEL position performs unexpectedly, Takkt AG 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 Takkt AG will offset losses from the drop in Takkt AG's long position.| NIPPON STEEL vs. Reliance Steel Aluminum | NIPPON STEEL vs. Superior Plus Corp | NIPPON STEEL vs. NMI Holdings | NIPPON STEEL vs. Origin Agritech |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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