Correlation Between Compagnie and Nidec

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

By analyzing existing cross correlation between Compagnie de Saint Gobain and Nidec, you can compare the effects of market volatilities on Compagnie and Nidec 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 Compagnie with a short position of Nidec. Check out your portfolio center. Please also check ongoing floating volatility patterns of Compagnie and Nidec.

Diversification Opportunities for Compagnie and Nidec

-0.2

Correlation Coefficient

Compagnie  Nidec

Good diversification

The 3 months correlation between Compagnie and Nidec is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Compagnie de Saint Gobain and Nidec in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nidec and Compagnie 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 Compagnie de Saint Gobain are associated (or correlated) with Nidec. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nidec has no effect on the direction of Compagnie i.e., Compagnie and Nidec go up and down completely randomly.

Pair Corralation between Compagnie and Nidec

If you would invest  568.00  in Nidec on October 15, 2024 and sell it today you would lose (138.00) from holding Nidec or give up 24.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	0.2%
Values	Daily Returns

Compagnie de Saint Gobain  vs.  Nidec

Compagnie de Saint

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Compagnie de Saint Gobain has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Compagnie is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Nidec

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nidec has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental drivers, Nidec is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Compagnie and Nidec

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

The idea behind Compagnie de Saint Gobain and Nidec 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.