Correlation Between VIVA WINE and NISSAN CHEMICAL

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

By analyzing existing cross correlation between VIVA WINE GROUP and NISSAN CHEMICAL IND, you can compare the effects of market volatilities on VIVA WINE and NISSAN CHEMICAL 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 VIVA WINE with a short position of NISSAN CHEMICAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of VIVA WINE and NISSAN CHEMICAL.

Diversification Opportunities for VIVA WINE and NISSAN CHEMICAL

0.28

Correlation Coefficient

VIVA WINE  NISSAN CHEMICAL

Modest diversification

The 3 months correlation between VIVA and NISSAN is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding VIVA WINE GROUP and NISSAN CHEMICAL IND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NISSAN CHEMICAL IND and VIVA WINE 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 VIVA WINE GROUP are associated (or correlated) with NISSAN CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NISSAN CHEMICAL IND has no effect on the direction of VIVA WINE i.e., VIVA WINE and NISSAN CHEMICAL go up and down completely randomly.

Pair Corralation between VIVA WINE and NISSAN CHEMICAL

Assuming the 90 days horizon VIVA WINE GROUP is expected to generate 3.1 times more return on investment than NISSAN CHEMICAL. However, VIVA WINE is 3.1 times more volatile than NISSAN CHEMICAL IND. It trades about 0.06 of its potential returns per unit of risk. NISSAN CHEMICAL IND is currently generating about -0.03 per unit of risk. If you would invest  121.00  in VIVA WINE GROUP on October 10, 2024 and sell it today you would earn a total of  214.00  from holding VIVA WINE GROUP or generate 176.86% return on investment over 90 days.

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

VIVA WINE GROUP  vs.  NISSAN CHEMICAL IND

VIVA WINE GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VIVA WINE GROUP 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.

NISSAN CHEMICAL IND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISSAN CHEMICAL IND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with VIVA WINE and NISSAN CHEMICAL

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

The idea behind VIVA WINE GROUP and NISSAN CHEMICAL IND 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.