Correlation Between Greek Organization and Nippon Light

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

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

Diversification Opportunities for Greek Organization and Nippon Light

-0.14

Correlation Coefficient

Greek Organization  Nippon Light

Good diversification

The 3 months correlation between Greek and Nippon is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Greek Organization of and Nippon Light Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nippon Light Metal and Greek Organization 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 Greek Organization of are associated (or correlated) with Nippon Light. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nippon Light Metal has no effect on the direction of Greek Organization i.e., Greek Organization and Nippon Light go up and down completely randomly.

Pair Corralation between Greek Organization and Nippon Light

Assuming the 90 days horizon Greek Organization of is expected to generate 0.76 times more return on investment than Nippon Light. However, Greek Organization of is 1.32 times less risky than Nippon Light. It trades about -0.02 of its potential returns per unit of risk. Nippon Light Metal is currently generating about -0.1 per unit of risk. If you would invest  1,570  in Greek Organization of on October 10, 2024 and sell it today you would lose (8.00) from holding Greek Organization of or give up 0.51% of portfolio value over 90 days.

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

Greek Organization of  vs.  Nippon Light Metal

Greek Organization

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Greek Organization of are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Greek Organization is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nippon Light Metal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nippon Light Metal 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.

Pair Trading with Greek Organization and Nippon Light

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

The idea behind Greek Organization of and Nippon Light Metal 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.