Correlation Between Altech Batteries and Nissan Chemical

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

By analyzing existing cross correlation between Altech Batteries Limited and Nissan Chemical Industries, you can compare the effects of market volatilities on Altech Batteries 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 Altech Batteries with a short position of Nissan Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Altech Batteries and Nissan Chemical.

Diversification Opportunities for Altech Batteries and Nissan Chemical

-0.27

Correlation Coefficient

Altech Batteries  Nissan Chemical

Very good diversification

The 3 months correlation between Altech and Nissan is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Altech Batteries Limited and Nissan Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nissan Chemical Indu and Altech Batteries 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 Altech Batteries Limited 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 Indu has no effect on the direction of Altech Batteries i.e., Altech Batteries and Nissan Chemical go up and down completely randomly.

Pair Corralation between Altech Batteries and Nissan Chemical

Assuming the 90 days horizon Altech Batteries Limited is expected to generate 4.82 times more return on investment than Nissan Chemical. However, Altech Batteries is 4.82 times more volatile than Nissan Chemical Industries. It trades about 0.07 of its potential returns per unit of risk. Nissan Chemical Industries is currently generating about 0.04 per unit of risk. If you would invest  3.68  in Altech Batteries Limited on September 23, 2024 and sell it today you would lose (0.68) from holding Altech Batteries Limited or give up 18.48% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.22%
Values	Daily Returns

Altech Batteries Limited  vs.  Nissan Chemical Industries

Altech Batteries

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Altech Batteries Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, Altech Batteries reported solid returns over the last few months and may actually be approaching a breakup point.

Nissan Chemical Indu

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nissan Chemical Industries are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile technical indicators, Nissan Chemical showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Altech Batteries and Nissan Chemical

The main advantage of trading using opposite Altech Batteries and Nissan Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Altech Batteries 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.

The idea behind Altech Batteries Limited and Nissan Chemical Industries 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.