Correlation Between CAIRN HOMES and Nomura Holdings

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

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

Diversification Opportunities for CAIRN HOMES and Nomura Holdings

0.06

Correlation Coefficient

CAIRN HOMES  Nomura Holdings

Significant diversification

The 3 months correlation between CAIRN and Nomura is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding CAIRN HOMES EO and Nomura Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nomura Holdings and CAIRN HOMES 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 CAIRN HOMES EO are associated (or correlated) with Nomura Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nomura Holdings has no effect on the direction of CAIRN HOMES i.e., CAIRN HOMES and Nomura Holdings go up and down completely randomly.

Pair Corralation between CAIRN HOMES and Nomura Holdings

Assuming the 90 days horizon CAIRN HOMES EO is expected to under-perform the Nomura Holdings. But the stock apears to be less risky and, when comparing its historical volatility, CAIRN HOMES EO is 1.09 times less risky than Nomura Holdings. The stock trades about -0.08 of its potential returns per unit of risk. The Nomura Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  539.00  in Nomura Holdings on December 20, 2024 and sell it today you would earn a total of  41.00  from holding Nomura Holdings or generate 7.61% return on investment over 90 days.

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

CAIRN HOMES EO  vs.  Nomura Holdings

CAIRN HOMES EO

Risk-Adjusted Performance

Very Weak

Over the last 90 days CAIRN HOMES EO has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Nomura Holdings

Risk-Adjusted Performance

Insignificant

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

Pair Trading with CAIRN HOMES and Nomura Holdings

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

The idea behind CAIRN HOMES EO and Nomura Holdings 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.