Correlation Between Traton SE and Nexam Chemical

Can any of the company-specific risk be diversified away by investing in both Traton SE and Nexam 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 Traton SE and Nexam Chemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Traton SE and Nexam Chemical Holding, you can compare the effects of market volatilities on Traton SE and Nexam 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 Traton SE with a short position of Nexam Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Traton SE and Nexam Chemical.

Diversification Opportunities for Traton SE and Nexam Chemical

-0.59

Correlation Coefficient

Traton SE  Nexam Chemical

Excellent diversification

The 3 months correlation between Traton and Nexam is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Traton SE and Nexam Chemical Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexam Chemical Holding and Traton SE 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 Traton SE are associated (or correlated) with Nexam Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexam Chemical Holding has no effect on the direction of Traton SE i.e., Traton SE and Nexam Chemical go up and down completely randomly.

Pair Corralation between Traton SE and Nexam Chemical

Assuming the 90 days trading horizon Traton SE is expected to generate 0.79 times more return on investment than Nexam Chemical. However, Traton SE is 1.27 times less risky than Nexam Chemical. It trades about 0.07 of its potential returns per unit of risk. Nexam Chemical Holding is currently generating about -0.12 per unit of risk. If you would invest  31,900  in Traton SE on December 30, 2024 and sell it today you would earn a total of  2,900  from holding Traton SE or generate 9.09% return on investment over 90 days.

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

Traton SE  vs.  Nexam Chemical Holding

Traton SE

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Traton SE are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Traton SE may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nexam Chemical Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nexam Chemical Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Traton SE and Nexam Chemical

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

The idea behind Traton SE and Nexam Chemical Holding 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.