Correlation Between Nissan Chemical and NH HOTEL

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Can any of the company-specific risk be diversified away by investing in both Nissan Chemical and NH HOTEL 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 NH HOTEL 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 NH HOTEL GROUP, you can compare the effects of market volatilities on Nissan Chemical and NH HOTEL 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 NH HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nissan Chemical and NH HOTEL.

Diversification Opportunities for Nissan Chemical and NH HOTEL

0.14
  Correlation Coefficient

Average diversification

The 3 months correlation between Nissan and NH5 is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Nissan Chemical Corp and NH HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NH HOTEL GROUP 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 NH HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NH HOTEL GROUP has no effect on the direction of Nissan Chemical i.e., Nissan Chemical and NH HOTEL go up and down completely randomly.

Pair Corralation between Nissan Chemical and NH HOTEL

Assuming the 90 days trading horizon Nissan Chemical Corp is expected to under-perform the NH HOTEL. But the stock apears to be less risky and, when comparing its historical volatility, Nissan Chemical Corp is 1.57 times less risky than NH HOTEL. The stock trades about 0.0 of its potential returns per unit of risk. The NH HOTEL GROUP is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  396.00  in NH HOTEL GROUP on September 14, 2024 and sell it today you would earn a total of  47.00  from holding NH HOTEL GROUP or generate 11.87% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Nissan Chemical Corp  vs.  NH HOTEL GROUP

 Performance 
       Timeline  
Nissan Chemical Corp 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Nissan Chemical Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Nissan Chemical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
NH HOTEL GROUP 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in NH HOTEL GROUP are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, NH HOTEL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nissan Chemical and NH HOTEL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nissan Chemical and NH HOTEL

The main advantage of trading using opposite Nissan Chemical and NH HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nissan Chemical position performs unexpectedly, NH HOTEL 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 NH HOTEL will offset losses from the drop in NH HOTEL's long position.
The idea behind Nissan Chemical Corp and NH HOTEL GROUP pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.

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