Correlation Between Nordson and Chart Industries

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

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

Diversification Opportunities for Nordson and Chart Industries

-0.43

Correlation Coefficient

Nordson  Chart Industries

Very good diversification

The 3 months correlation between Nordson and Chart is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Nordson and Chart Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chart Industries and Nordson 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 Nordson are associated (or correlated) with Chart Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chart Industries has no effect on the direction of Nordson i.e., Nordson and Chart Industries go up and down completely randomly.

Pair Corralation between Nordson and Chart Industries

Given the investment horizon of 90 days Nordson is expected to under-perform the Chart Industries. But the stock apears to be less risky and, when comparing its historical volatility, Nordson is 1.07 times less risky than Chart Industries. The stock trades about -0.45 of its potential returns per unit of risk. The Chart Industries is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  19,060  in Chart Industries on October 6, 2024 and sell it today you would earn a total of  836.00  from holding Chart Industries or generate 4.39% return on investment over 90 days.

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

Nordson  vs.  Chart Industries

Nordson

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nordson has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Chart Industries

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Chart Industries are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Chart Industries unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nordson and Chart Industries

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

The idea behind Nordson and Chart Industries 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.