Correlation Between Americas Gold and Nippon Light
Can any of the company-specific risk be diversified away by investing in both Americas Gold and Nippon Light 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 Americas Gold and Nippon Light into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Americas Gold and and Nippon Light Metal, you can compare the effects of market volatilities on Americas Gold and Nippon Light 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 Americas Gold with a short position of Nippon Light. Check out your portfolio center. Please also check ongoing floating volatility patterns of Americas Gold and Nippon Light.
Diversification Opportunities for Americas Gold and Nippon Light
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Americas and Nippon is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Americas Gold and and Nippon Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Light Metal and Americas Gold 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 Americas Gold and are associated (or correlated) with Nippon Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Light Metal has no effect on the direction of Americas Gold i.e., Americas Gold and Nippon Light go up and down completely randomly.
Pair Corralation between Americas Gold and Nippon Light
Assuming the 90 days trading horizon Americas Gold and is expected to generate 3.46 times more return on investment than Nippon Light. However, Americas Gold is 3.46 times more volatile than Nippon Light Metal. It trades about 0.08 of its potential returns per unit of risk. Nippon Light Metal is currently generating about -0.01 per unit of risk. If you would invest 40.00 in Americas Gold and on October 26, 2024 and sell it today you would earn a total of 7.00 from holding Americas Gold and or generate 17.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.33% |
| Values | Daily Returns |
Americas Gold and vs. Nippon Light Metal
Performance |
| Timeline |
| Americas Gold |
| Nippon Light Metal |
Americas Gold and Nippon Light Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Americas Gold and Nippon Light
The main advantage of trading using opposite Americas Gold and Nippon Light positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Americas Gold position performs unexpectedly, Nippon Light 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 Light will offset losses from the drop in Nippon Light's long position.| Americas Gold vs. Daito Trust Construction | Americas Gold vs. FARM 51 GROUP | Americas Gold vs. Major Drilling Group | Americas Gold vs. WIMFARM SA EO |
| Nippon Light vs. CITIC Telecom International | Nippon Light vs. COMBA TELECOM SYST | Nippon Light vs. China Communications Services | Nippon Light vs. Chengdu PUTIAN Telecommunications |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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