Correlation Between Applied Digital and Nomura Research

Can any of the company-specific risk be diversified away by investing in both Applied Digital and Nomura Research 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 Applied Digital and Nomura Research into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Applied Digital and Nomura Research Institute, you can compare the effects of market volatilities on Applied Digital and Nomura Research 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 Applied Digital with a short position of Nomura Research. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Digital and Nomura Research.

Diversification Opportunities for Applied Digital and Nomura Research

-0.31

Correlation Coefficient

Applied Digital  Nomura Research

Very good diversification

The 3 months correlation between Applied and Nomura is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Applied Digital and Nomura Research Institute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Research Institute and Applied Digital 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 Applied Digital are associated (or correlated) with Nomura Research. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Research Institute has no effect on the direction of Applied Digital i.e., Applied Digital and Nomura Research go up and down completely randomly.

Pair Corralation between Applied Digital and Nomura Research

Given the investment horizon of 90 days Applied Digital is expected to under-perform the Nomura Research. In addition to that, Applied Digital is 4.96 times more volatile than Nomura Research Institute. It trades about -0.03 of its total potential returns per unit of risk. Nomura Research Institute is currently generating about 0.1 per unit of volatility. If you would invest  2,957  in Nomura Research Institute on December 26, 2024 and sell it today you would earn a total of  279.00  from holding Nomura Research Institute or generate 9.44% return on investment over 90 days.

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

Applied Digital  vs.  Nomura Research Institute

Applied Digital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Applied Digital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's essential indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Nomura Research Institute

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Research Institute are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Nomura Research may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Applied Digital and Nomura Research

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

The idea behind Applied Digital and Nomura Research Institute 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 Global Correlations module to find global opportunities by holding instruments from different markets.