Correlation Between Nexam Chemical and AAC Clyde

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

By analyzing existing cross correlation between Nexam Chemical Holding and AAC Clyde Space, you can compare the effects of market volatilities on Nexam Chemical and AAC Clyde 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 Nexam Chemical with a short position of AAC Clyde. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexam Chemical and AAC Clyde.

Diversification Opportunities for Nexam Chemical and AAC Clyde

-0.37

Correlation Coefficient

Nexam Chemical  AAC Clyde

Very good diversification

The 3 months correlation between Nexam and AAC is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Nexam Chemical Holding and AAC Clyde Space in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AAC Clyde Space and Nexam Chemical 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 Nexam Chemical Holding are associated (or correlated) with AAC Clyde. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AAC Clyde Space has no effect on the direction of Nexam Chemical i.e., Nexam Chemical and AAC Clyde go up and down completely randomly.

Pair Corralation between Nexam Chemical and AAC Clyde

Assuming the 90 days trading horizon Nexam Chemical Holding is expected to under-perform the AAC Clyde. But the stock apears to be less risky and, when comparing its historical volatility, Nexam Chemical Holding is 1.22 times less risky than AAC Clyde. The stock trades about -0.09 of its potential returns per unit of risk. The AAC Clyde Space is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,475  in AAC Clyde Space on September 3, 2024 and sell it today you would earn a total of  1,325  from holding AAC Clyde Space or generate 38.13% return on investment over 90 days.

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

Nexam Chemical Holding  vs.  AAC Clyde Space

Nexam Chemical Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nexam Chemical Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

AAC Clyde Space

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in AAC Clyde Space are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, AAC Clyde unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexam Chemical and AAC Clyde

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

The idea behind Nexam Chemical Holding and AAC Clyde Space 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.