Correlation Between Next Hydrogen and Daifuku Co
Can any of the company-specific risk be diversified away by investing in both Next Hydrogen and Daifuku Co 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 Next Hydrogen and Daifuku Co into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Next Hydrogen Solutions and Daifuku Co, you can compare the effects of market volatilities on Next Hydrogen and Daifuku Co 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 Next Hydrogen with a short position of Daifuku Co. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Hydrogen and Daifuku Co.
Diversification Opportunities for Next Hydrogen and Daifuku Co
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Next and Daifuku is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Next Hydrogen Solutions and Daifuku Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daifuku Co and Next Hydrogen 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 Next Hydrogen Solutions are associated (or correlated) with Daifuku Co. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daifuku Co has no effect on the direction of Next Hydrogen i.e., Next Hydrogen and Daifuku Co go up and down completely randomly.
Pair Corralation between Next Hydrogen and Daifuku Co
Assuming the 90 days horizon Next Hydrogen Solutions is expected to generate 7.51 times more return on investment than Daifuku Co. However, Next Hydrogen is 7.51 times more volatile than Daifuku Co. It trades about 0.05 of its potential returns per unit of risk. Daifuku Co is currently generating about 0.04 per unit of risk. If you would invest 74.00 in Next Hydrogen Solutions on September 1, 2024 and sell it today you would lose (44.00) from holding Next Hydrogen Solutions or give up 59.46% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Hydrogen Solutions vs. Daifuku Co
Performance |
| Timeline |
| Next Hydrogen Solutions |
| Daifuku Co |
Next Hydrogen and Daifuku Co Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Hydrogen and Daifuku Co
The main advantage of trading using opposite Next Hydrogen and Daifuku Co positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Hydrogen position performs unexpectedly, Daifuku Co 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 Daifuku Co will offset losses from the drop in Daifuku Co's long position.| Next Hydrogen vs. Weir Group PLC | Next Hydrogen vs. Greenshift Corp | Next Hydrogen vs. Quality Industrial Corp | Next Hydrogen vs. ITM Power Plc |
| Daifuku Co vs. Eaton PLC | Daifuku Co vs. Nel ASA | Daifuku Co vs. Next Hydrogen Solutions | Daifuku Co vs. Nel ASA |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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