Correlation Between Nomura Holdings and GrafTech International
Can any of the company-specific risk be diversified away by investing in both Nomura Holdings and GrafTech International 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 Nomura Holdings and GrafTech International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nomura Holdings and GrafTech International, you can compare the effects of market volatilities on Nomura Holdings and GrafTech International 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 Nomura Holdings with a short position of GrafTech International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Holdings and GrafTech International.
Diversification Opportunities for Nomura Holdings and GrafTech International
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Nomura and GrafTech is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings and GrafTech International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GrafTech International and Nomura Holdings 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 Nomura Holdings are associated (or correlated) with GrafTech International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GrafTech International has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and GrafTech International go up and down completely randomly.
Pair Corralation between Nomura Holdings and GrafTech International
Assuming the 90 days horizon Nomura Holdings is expected to generate 0.37 times more return on investment than GrafTech International. However, Nomura Holdings is 2.7 times less risky than GrafTech International. It trades about 0.05 of its potential returns per unit of risk. GrafTech International is currently generating about -0.01 per unit of risk. If you would invest 349.00 in Nomura Holdings on September 24, 2024 and sell it today you would earn a total of 190.00 from holding Nomura Holdings or generate 54.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nomura Holdings vs. GrafTech International
Performance |
| Timeline |
| Nomura Holdings |
| GrafTech International |
Nomura Holdings and GrafTech International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nomura Holdings and GrafTech International
The main advantage of trading using opposite Nomura Holdings and GrafTech International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomura Holdings position performs unexpectedly, GrafTech International 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 GrafTech International will offset losses from the drop in GrafTech International's long position.| Nomura Holdings vs. PKSHA TECHNOLOGY INC | Nomura Holdings vs. X FAB Silicon Foundries | Nomura Holdings vs. ALERION CLEANPOWER | Nomura Holdings vs. SUN ART RETAIL |
| GrafTech International vs. Evolution Mining Limited | GrafTech International vs. American Airlines Group | GrafTech International vs. Clean Energy Fuels | GrafTech International vs. ALERION CLEANPOWER |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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