Correlation Between Next Hydrogen and SMC Corp
Can any of the company-specific risk be diversified away by investing in both Next Hydrogen and SMC Corp 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 SMC Corp 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 SMC Corp Japan, you can compare the effects of market volatilities on Next Hydrogen and SMC Corp 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 SMC Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Next Hydrogen and SMC Corp.
Diversification Opportunities for Next Hydrogen and SMC Corp
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Next and SMC is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Next Hydrogen Solutions and SMC Corp Japan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SMC Corp Japan 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 SMC Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SMC Corp Japan has no effect on the direction of Next Hydrogen i.e., Next Hydrogen and SMC Corp go up and down completely randomly.
Pair Corralation between Next Hydrogen and SMC Corp
Assuming the 90 days horizon Next Hydrogen Solutions is expected to generate 11.07 times more return on investment than SMC Corp. However, Next Hydrogen is 11.07 times more volatile than SMC Corp Japan. It trades about 0.09 of its potential returns per unit of risk. SMC Corp Japan is currently generating about 0.09 per unit of risk. If you would invest 28.00 in Next Hydrogen Solutions on August 29, 2024 and sell it today you would earn a total of 2.00 from holding Next Hydrogen Solutions or generate 7.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Next Hydrogen Solutions vs. SMC Corp Japan
Performance |
| Timeline |
| Next Hydrogen Solutions |
| SMC Corp Japan |
Next Hydrogen and SMC Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Next Hydrogen and SMC Corp
The main advantage of trading using opposite Next Hydrogen and SMC Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Next Hydrogen position performs unexpectedly, SMC Corp 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 SMC Corp will offset losses from the drop in SMC Corp's long position.| Next Hydrogen vs. Parker Hannifin | Next Hydrogen vs. Eaton PLC | Next Hydrogen vs. Dover | Next Hydrogen vs. Illinois Tool Works |
| SMC Corp vs. Schneider Electric SE | SMC Corp vs. Atlas Copco AB | SMC Corp vs. Fanuc | SMC Corp vs. Sandvik AB |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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