Correlation Between NISSAN CHEMICAL and IMPERIAL TOBACCO
Can any of the company-specific risk be diversified away by investing in both NISSAN CHEMICAL and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO 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 IMPERIAL TOBACCO , you can compare the effects of market volatilities on NISSAN CHEMICAL and IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISSAN CHEMICAL and IMPERIAL TOBACCO.
Diversification Opportunities for NISSAN CHEMICAL and IMPERIAL TOBACCO
-0.67 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between NISSAN and IMPERIAL is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding NISSAN CHEMICAL IND and IMPERIAL TOBACCO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IMPERIAL TOBACCO 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 IMPERIAL TOBACCO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IMPERIAL TOBACCO has no effect on the direction of NISSAN CHEMICAL i.e., NISSAN CHEMICAL and IMPERIAL TOBACCO go up and down completely randomly.
Pair Corralation between NISSAN CHEMICAL and IMPERIAL TOBACCO
Assuming the 90 days trading horizon NISSAN CHEMICAL IND is expected to under-perform the IMPERIAL TOBACCO. In addition to that, NISSAN CHEMICAL is 1.23 times more volatile than IMPERIAL TOBACCO . It trades about -0.12 of its total potential returns per unit of risk. IMPERIAL TOBACCO is currently generating about -0.11 per unit of volatility. If you would invest 3,357 in IMPERIAL TOBACCO on December 10, 2024 and sell it today you would lose (86.00) from holding IMPERIAL TOBACCO or give up 2.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NISSAN CHEMICAL IND vs. IMPERIAL TOBACCO
Performance |
| Timeline |
| NISSAN CHEMICAL IND |
| IMPERIAL TOBACCO |
NISSAN CHEMICAL and IMPERIAL TOBACCO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NISSAN CHEMICAL and IMPERIAL TOBACCO
The main advantage of trading using opposite NISSAN CHEMICAL and IMPERIAL TOBACCO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NISSAN CHEMICAL position performs unexpectedly, IMPERIAL TOBACCO 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 IMPERIAL TOBACCO will offset losses from the drop in IMPERIAL TOBACCO's long position.| NISSAN CHEMICAL vs. Cognizant Technology Solutions | NISSAN CHEMICAL vs. United Airlines Holdings | NISSAN CHEMICAL vs. AEGEAN AIRLINES | NISSAN CHEMICAL vs. Beta Systems Software |
| IMPERIAL TOBACCO vs. ETFS Coffee ETC | IMPERIAL TOBACCO vs. Media and Games | IMPERIAL TOBACCO vs. Ultra Clean Holdings | IMPERIAL TOBACCO vs. OURGAME INTHOLDL 00005 |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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