Correlation Between Astar and Nippon Mutual

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

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

Diversification Opportunities for Astar and Nippon Mutual

0.44

Correlation Coefficient

Astar  Nippon Mutual

Very weak diversification

The 3 months correlation between Astar and Nippon is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Nippon Mutual Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Mutual Funds and Astar 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 Astar are associated (or correlated) with Nippon Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Mutual Funds has no effect on the direction of Astar i.e., Astar and Nippon Mutual go up and down completely randomly.

Pair Corralation between Astar and Nippon Mutual

Assuming the 90 days trading horizon Astar is expected to under-perform the Nippon Mutual. In addition to that, Astar is 3.94 times more volatile than Nippon Mutual Funds. It trades about -0.18 of its total potential returns per unit of risk. Nippon Mutual Funds is currently generating about -0.46 per unit of volatility. If you would invest  7,900  in Nippon Mutual Funds on October 12, 2024 and sell it today you would lose (930.00) from holding Nippon Mutual Funds or give up 11.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Astar  vs.  Nippon Mutual Funds

Astar

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astar are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound fundamental indicators, Astar is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Nippon Mutual Funds

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nippon Mutual Funds has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong technical and fundamental indicators, Nippon Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Astar and Nippon Mutual

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

The idea behind Astar and Nippon Mutual Funds 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.