Correlation Between Nissan Chemical and LPKF Laser
Can any of the company-specific risk be diversified away by investing in both Nissan Chemical and LPKF Laser 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 LPKF Laser into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nissan Chemical Corp and LPKF Laser Electronics, you can compare the effects of market volatilities on Nissan Chemical and LPKF Laser 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 LPKF Laser. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nissan Chemical and LPKF Laser.
Diversification Opportunities for Nissan Chemical and LPKF Laser
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nissan and LPKF is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Nissan Chemical Corp and LPKF Laser Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LPKF Laser Electronics 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 Corp are associated (or correlated) with LPKF Laser. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LPKF Laser Electronics has no effect on the direction of Nissan Chemical i.e., Nissan Chemical and LPKF Laser go up and down completely randomly.
Pair Corralation between Nissan Chemical and LPKF Laser
Assuming the 90 days trading horizon Nissan Chemical Corp is expected to under-perform the LPKF Laser. But the stock apears to be less risky and, when comparing its historical volatility, Nissan Chemical Corp is 3.8 times less risky than LPKF Laser. The stock trades about -0.37 of its potential returns per unit of risk. The LPKF Laser Electronics is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 845.00 in LPKF Laser Electronics on September 24, 2024 and sell it today you would earn a total of 45.00 from holding LPKF Laser Electronics or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nissan Chemical Corp vs. LPKF Laser Electronics
Performance |
| Timeline |
| Nissan Chemical Corp |
| LPKF Laser Electronics |
Nissan Chemical and LPKF Laser Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nissan Chemical and LPKF Laser
The main advantage of trading using opposite Nissan Chemical and LPKF Laser positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nissan Chemical position performs unexpectedly, LPKF Laser 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 LPKF Laser will offset losses from the drop in LPKF Laser's long position.| Nissan Chemical vs. Apple Inc | Nissan Chemical vs. Apple Inc | Nissan Chemical vs. Apple Inc | Nissan Chemical vs. Apple Inc |
| LPKF Laser vs. CHEMICAL INDUSTRIES | LPKF Laser vs. PTT Global Chemical | LPKF Laser vs. Nissan Chemical Corp | LPKF Laser vs. Soken Chemical Engineering |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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