Correlation Between STORE ELECTRONIC and NISSAN CHEMICAL
Can any of the company-specific risk be diversified away by investing in both STORE ELECTRONIC and NISSAN 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 STORE ELECTRONIC and NISSAN CHEMICAL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between STORE ELECTRONIC and NISSAN CHEMICAL IND, you can compare the effects of market volatilities on STORE ELECTRONIC and NISSAN 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 STORE ELECTRONIC with a short position of NISSAN CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of STORE ELECTRONIC and NISSAN CHEMICAL.
Diversification Opportunities for STORE ELECTRONIC and NISSAN CHEMICAL
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between STORE and NISSAN is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding STORE ELECTRONIC and NISSAN CHEMICAL IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSAN CHEMICAL IND and STORE ELECTRONIC 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 STORE ELECTRONIC are associated (or correlated) with NISSAN CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSAN CHEMICAL IND has no effect on the direction of STORE ELECTRONIC i.e., STORE ELECTRONIC and NISSAN CHEMICAL go up and down completely randomly.
Pair Corralation between STORE ELECTRONIC and NISSAN CHEMICAL
Assuming the 90 days trading horizon STORE ELECTRONIC is expected to generate 1.6 times more return on investment than NISSAN CHEMICAL. However, STORE ELECTRONIC is 1.6 times more volatile than NISSAN CHEMICAL IND. It trades about 0.05 of its potential returns per unit of risk. NISSAN CHEMICAL IND is currently generating about 0.01 per unit of risk. If you would invest 10,935 in STORE ELECTRONIC on September 4, 2024 and sell it today you would earn a total of 3,145 from holding STORE ELECTRONIC or generate 28.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.6% |
| Values | Daily Returns |
STORE ELECTRONIC vs. NISSAN CHEMICAL IND
Performance |
| Timeline |
| STORE ELECTRONIC |
| NISSAN CHEMICAL IND |
STORE ELECTRONIC and NISSAN CHEMICAL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with STORE ELECTRONIC and NISSAN CHEMICAL
The main advantage of trading using opposite STORE ELECTRONIC and NISSAN CHEMICAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if STORE ELECTRONIC position performs unexpectedly, NISSAN 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 NISSAN CHEMICAL will offset losses from the drop in NISSAN CHEMICAL's long position.| STORE ELECTRONIC vs. TOTAL GABON | STORE ELECTRONIC vs. Walgreens Boots Alliance | STORE ELECTRONIC vs. Peak Resources Limited |
| NISSAN CHEMICAL vs. MTI WIRELESS EDGE | NISSAN CHEMICAL vs. Mobilezone Holding AG | NISSAN CHEMICAL vs. MAVEN WIRELESS SWEDEN | NISSAN CHEMICAL vs. Charter Communications |
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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