Correlation Between NISSAN CHEMICAL and AMAG AUSTRIA
Can any of the company-specific risk be diversified away by investing in both NISSAN CHEMICAL and AMAG AUSTRIA 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 NISSAN CHEMICAL and AMAG AUSTRIA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NISSAN CHEMICAL IND and AMAG AUSTRIA M, you can compare the effects of market volatilities on NISSAN CHEMICAL and AMAG AUSTRIA 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 NISSAN CHEMICAL with a short position of AMAG AUSTRIA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISSAN CHEMICAL and AMAG AUSTRIA.
Diversification Opportunities for NISSAN CHEMICAL and AMAG AUSTRIA
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NISSAN and AMAG is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding NISSAN CHEMICAL IND and AMAG AUSTRIA M in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMAG AUSTRIA M and NISSAN CHEMICAL 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 NISSAN CHEMICAL IND are associated (or correlated) with AMAG AUSTRIA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMAG AUSTRIA M has no effect on the direction of NISSAN CHEMICAL i.e., NISSAN CHEMICAL and AMAG AUSTRIA go up and down completely randomly.
Pair Corralation between NISSAN CHEMICAL and AMAG AUSTRIA
Assuming the 90 days trading horizon NISSAN CHEMICAL IND is expected to generate 2.06 times more return on investment than AMAG AUSTRIA. However, NISSAN CHEMICAL is 2.06 times more volatile than AMAG AUSTRIA M. It trades about -0.02 of its potential returns per unit of risk. AMAG AUSTRIA M is currently generating about -0.06 per unit of risk. If you would invest 4,160 in NISSAN CHEMICAL IND on September 13, 2024 and sell it today you would lose (1,000.00) from holding NISSAN CHEMICAL IND or give up 24.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NISSAN CHEMICAL IND vs. AMAG AUSTRIA M
Performance |
| Timeline |
| NISSAN CHEMICAL IND |
| AMAG AUSTRIA M |
NISSAN CHEMICAL and AMAG AUSTRIA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NISSAN CHEMICAL and AMAG AUSTRIA
The main advantage of trading using opposite NISSAN CHEMICAL and AMAG AUSTRIA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISSAN CHEMICAL position performs unexpectedly, AMAG AUSTRIA 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 AMAG AUSTRIA will offset losses from the drop in AMAG AUSTRIA's long position.| NISSAN CHEMICAL vs. Apple Inc | NISSAN CHEMICAL vs. Apple Inc | NISSAN CHEMICAL vs. Apple Inc | NISSAN CHEMICAL vs. Apple Inc |
| AMAG AUSTRIA vs. SMA Solar Technology | AMAG AUSTRIA vs. IDP EDUCATION LTD | AMAG AUSTRIA vs. Grand Canyon Education | AMAG AUSTRIA vs. Laureate Education |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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