Correlation Between Nexam Chemical and BIMobject

Can any of the company-specific risk be diversified away by investing in both Nexam Chemical and BIMobject 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 BIMobject 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 BIMobject AB, you can compare the effects of market volatilities on Nexam Chemical and BIMobject 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 BIMobject. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nexam Chemical and BIMobject.

Diversification Opportunities for Nexam Chemical and BIMobject

-0.17

Correlation Coefficient

Nexam Chemical  BIMobject

Good diversification

The 3 months correlation between Nexam and BIMobject is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nexam Chemical Holding and BIMobject AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIMobject AB 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 BIMobject. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIMobject AB has no effect on the direction of Nexam Chemical i.e., Nexam Chemical and BIMobject go up and down completely randomly.

Pair Corralation between Nexam Chemical and BIMobject

Assuming the 90 days trading horizon Nexam Chemical Holding is expected to under-perform the BIMobject. In addition to that, Nexam Chemical is 1.13 times more volatile than BIMobject AB. It trades about -0.05 of its total potential returns per unit of risk. BIMobject AB is currently generating about 0.16 per unit of volatility. If you would invest  454.00  in BIMobject AB on October 23, 2024 and sell it today you would earn a total of  118.00  from holding BIMobject AB or generate 25.99% 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.  BIMobject AB

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 latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

BIMobject AB

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BIMobject AB are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain primary indicators, BIMobject unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nexam Chemical and BIMobject

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

The idea behind Nexam Chemical Holding and BIMobject AB 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.