Correlation Between Nabtesco Corp and Sienna Senior

Can any of the company-specific risk be diversified away by investing in both Nabtesco Corp and Sienna Senior 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 Nabtesco Corp and Sienna Senior into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nabtesco Corp and Sienna Senior Living, you can compare the effects of market volatilities on Nabtesco Corp and Sienna Senior 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 Nabtesco Corp with a short position of Sienna Senior. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nabtesco Corp and Sienna Senior.

Diversification Opportunities for Nabtesco Corp and Sienna Senior

-0.82

Correlation Coefficient

Nabtesco Corp  Sienna Senior

Pay attention - limited upside

The 3 months correlation between Nabtesco and Sienna is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Nabtesco Corp and Sienna Senior Living in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sienna Senior Living and Nabtesco Corp 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 Nabtesco Corp are associated (or correlated) with Sienna Senior. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sienna Senior Living has no effect on the direction of Nabtesco Corp i.e., Nabtesco Corp and Sienna Senior go up and down completely randomly.

Pair Corralation between Nabtesco Corp and Sienna Senior

Assuming the 90 days trading horizon Nabtesco Corp is expected to generate 0.45 times more return on investment than Sienna Senior. However, Nabtesco Corp is 2.23 times less risky than Sienna Senior. It trades about 0.03 of its potential returns per unit of risk. Sienna Senior Living is currently generating about -0.08 per unit of risk. If you would invest  1,680  in Nabtesco Corp on October 27, 2024 and sell it today you would earn a total of  10.00  from holding Nabtesco Corp or generate 0.6% return on investment over 90 days.

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

Nabtesco Corp  vs.  Sienna Senior Living

Nabtesco Corp

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nabtesco Corp are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Nabtesco Corp unveiled solid returns over the last few months and may actually be approaching a breakup point.

Sienna Senior Living

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sienna Senior Living has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nabtesco Corp and Sienna Senior

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

The idea behind Nabtesco Corp and Sienna Senior Living 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.