Correlation Between NISSAN CHEMICAL and Amazon
Can any of the company-specific risk be diversified away by investing in both NISSAN CHEMICAL and Amazon 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 Amazon 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 Amazon Inc, you can compare the effects of market volatilities on NISSAN CHEMICAL and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISSAN CHEMICAL and Amazon.
Diversification Opportunities for NISSAN CHEMICAL and Amazon
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NISSAN and Amazon is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding NISSAN CHEMICAL IND and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of NISSAN CHEMICAL i.e., NISSAN CHEMICAL and Amazon go up and down completely randomly.
Pair Corralation between NISSAN CHEMICAL and Amazon
Assuming the 90 days trading horizon NISSAN CHEMICAL is expected to generate 2.35 times less return on investment than Amazon. But when comparing it to its historical volatility, NISSAN CHEMICAL IND is 1.67 times less risky than Amazon. It trades about 0.16 of its potential returns per unit of risk. Amazon Inc is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 17,764 in Amazon Inc on August 31, 2024 and sell it today you would earn a total of 1,918 from holding Amazon Inc or generate 10.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NISSAN CHEMICAL IND vs. Amazon Inc
Performance |
| Timeline |
| NISSAN CHEMICAL IND |
| Amazon Inc |
NISSAN CHEMICAL and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NISSAN CHEMICAL and Amazon
The main advantage of trading using opposite NISSAN CHEMICAL and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISSAN CHEMICAL position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| NISSAN CHEMICAL vs. SIVERS SEMICONDUCTORS AB | NISSAN CHEMICAL vs. Darden Restaurants | NISSAN CHEMICAL vs. Reliance Steel Aluminum | NISSAN CHEMICAL vs. Q2M Managementberatung AG |
| Amazon vs. COMBA TELECOM SYST | Amazon vs. Carsales | Amazon vs. SALESFORCE INC CDR | Amazon vs. Rogers Communications |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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