Correlation Between Corporate Travel and Nippon Telegraph

Can any of the company-specific risk be diversified away by investing in both Corporate Travel and Nippon Telegraph 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 Corporate Travel and Nippon Telegraph into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Corporate Travel Management and Nippon Telegraph and, you can compare the effects of market volatilities on Corporate Travel and Nippon Telegraph 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 Corporate Travel with a short position of Nippon Telegraph. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Travel and Nippon Telegraph.

Diversification Opportunities for Corporate Travel and Nippon Telegraph

0.64

Correlation Coefficient

Corporate Travel  Nippon Telegraph

Poor diversification

The 3 months correlation between Corporate and Nippon is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and Nippon Telegraph and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Telegraph and Corporate Travel 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 Corporate Travel Management are associated (or correlated) with Nippon Telegraph. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Telegraph has no effect on the direction of Corporate Travel i.e., Corporate Travel and Nippon Telegraph go up and down completely randomly.

Pair Corralation between Corporate Travel and Nippon Telegraph

Assuming the 90 days trading horizon Corporate Travel Management is expected to generate 3.04 times more return on investment than Nippon Telegraph. However, Corporate Travel is 3.04 times more volatile than Nippon Telegraph and. It trades about 0.31 of its potential returns per unit of risk. Nippon Telegraph and is currently generating about -0.09 per unit of risk. If you would invest  765.00  in Corporate Travel Management on October 24, 2024 and sell it today you would earn a total of  85.00  from holding Corporate Travel Management or generate 11.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Corporate Travel Management  vs.  Nippon Telegraph and

Corporate Travel Man

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Travel Management are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Corporate Travel unveiled solid returns over the last few months and may actually be approaching a breakup point.

Nippon Telegraph

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Telegraph and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Nippon Telegraph is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Corporate Travel and Nippon Telegraph

The main advantage of trading using opposite Corporate Travel and Nippon Telegraph positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Travel position performs unexpectedly, Nippon Telegraph 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 Telegraph will offset losses from the drop in Nippon Telegraph's long position.

The idea behind Corporate Travel Management and Nippon Telegraph and pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.