Correlation Between Nomura Holdings and Allient

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

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

Diversification Opportunities for Nomura Holdings and Allient

0.96

Correlation Coefficient

Nomura Holdings  Allient

Almost no diversification

The 3 months correlation between Nomura and Allient is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings ADR and Allient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Allient and Nomura Holdings 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 Nomura Holdings ADR are associated (or correlated) with Allient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Allient has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Allient go up and down completely randomly.

Pair Corralation between Nomura Holdings and Allient

Considering the 90-day investment horizon Nomura Holdings ADR is expected to generate 0.7 times more return on investment than Allient. However, Nomura Holdings ADR is 1.42 times less risky than Allient. It trades about 0.06 of its potential returns per unit of risk. Allient is currently generating about -0.01 per unit of risk. If you would invest  420.00  in Nomura Holdings ADR on October 4, 2024 and sell it today you would earn a total of  159.00  from holding Nomura Holdings ADR or generate 37.86% return on investment over 90 days.

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

Nomura Holdings ADR  vs.  Allient

Nomura Holdings ADR

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, Nomura Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Allient

Risk-Adjusted Performance

16 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Allient are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Allient unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nomura Holdings and Allient

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

The idea behind Nomura Holdings ADR and Allient 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.