Correlation Between Investment and Nexam Chemical
Can any of the company-specific risk be diversified away by investing in both Investment and Nexam Chemical 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 Investment and Nexam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment AB Oresund and Nexam Chemical Holding, you can compare the effects of market volatilities on Investment and Nexam Chemical 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 Investment with a short position of Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Nexam Chemical.
Diversification Opportunities for Investment and Nexam Chemical
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Investment and Nexam is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Investment AB Oresund and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding and Investment 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 Investment AB Oresund are associated (or correlated) with Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of Investment i.e., Investment and Nexam Chemical go up and down completely randomly.
Pair Corralation between Investment and Nexam Chemical
Assuming the 90 days trading horizon Investment AB Oresund is expected to generate 0.57 times more return on investment than Nexam Chemical. However, Investment AB Oresund is 1.75 times less risky than Nexam Chemical. It trades about -0.05 of its potential returns per unit of risk. Nexam Chemical Holding is currently generating about -0.05 per unit of risk. If you would invest 11,340 in Investment AB Oresund on September 2, 2024 and sell it today you would lose (180.00) from holding Investment AB Oresund or give up 1.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investment AB Oresund vs. Nexam Chemical Holding
Performance |
| Timeline |
| Investment AB Oresund |
| Nexam Chemical Holding |
Investment and Nexam Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and Nexam Chemical
The main advantage of trading using opposite Investment and Nexam Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, Nexam Chemical 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 Nexam Chemical will offset losses from the drop in Nexam Chemical's long position.| Investment vs. Bure Equity AB | Investment vs. Creades AB | Investment vs. L E Lundbergfretagen | Investment vs. Industrivarden AB ser |
| Nexam Chemical vs. Polygiene AB | Nexam Chemical vs. Svenska Aerogel Holding | Nexam Chemical vs. Organoclick AB | Nexam Chemical vs. Kancera 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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