Correlation Between Caltagirone SpA and NIPPON STEEL
Can any of the company-specific risk be diversified away by investing in both Caltagirone SpA and NIPPON STEEL 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 Caltagirone SpA and NIPPON STEEL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caltagirone SpA and NIPPON STEEL SPADR, you can compare the effects of market volatilities on Caltagirone SpA and NIPPON STEEL 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 Caltagirone SpA with a short position of NIPPON STEEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caltagirone SpA and NIPPON STEEL.
Diversification Opportunities for Caltagirone SpA and NIPPON STEEL
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Caltagirone and NIPPON is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Caltagirone SpA and NIPPON STEEL SPADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NIPPON STEEL SPADR and Caltagirone SpA 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 Caltagirone SpA are associated (or correlated) with NIPPON STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NIPPON STEEL SPADR has no effect on the direction of Caltagirone SpA i.e., Caltagirone SpA and NIPPON STEEL go up and down completely randomly.
Pair Corralation between Caltagirone SpA and NIPPON STEEL
Assuming the 90 days trading horizon Caltagirone SpA is expected to generate 1.07 times less return on investment than NIPPON STEEL. But when comparing it to its historical volatility, Caltagirone SpA is 2.34 times less risky than NIPPON STEEL. It trades about 0.41 of its potential returns per unit of risk. NIPPON STEEL SPADR is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 610.00 in NIPPON STEEL SPADR on November 18, 2024 and sell it today you would earn a total of 65.00 from holding NIPPON STEEL SPADR or generate 10.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Caltagirone SpA vs. NIPPON STEEL SPADR
Performance |
| Timeline |
| Caltagirone SpA |
| NIPPON STEEL SPADR |
Caltagirone SpA and NIPPON STEEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caltagirone SpA and NIPPON STEEL
The main advantage of trading using opposite Caltagirone SpA and NIPPON STEEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caltagirone SpA position performs unexpectedly, NIPPON STEEL 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 NIPPON STEEL will offset losses from the drop in NIPPON STEEL's long position.| Caltagirone SpA vs. ScanSource | Caltagirone SpA vs. Renesas Electronics | Caltagirone SpA vs. Samsung Electronics Co | Caltagirone SpA vs. LG Electronics |
| NIPPON STEEL vs. ANTA SPORTS PRODUCT | NIPPON STEEL vs. ARISTOCRAT LEISURE | NIPPON STEEL vs. COLUMBIA SPORTSWEAR | NIPPON STEEL vs. Columbia Sportswear |
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 Stocks Directory module to find actively traded stocks across global markets.
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