Correlation Between Nomura Holdings and Dianthus Therapeutics

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

Diversification Opportunities for Nomura Holdings and Dianthus Therapeutics

-0.7

Correlation Coefficient

Nomura Holdings  Dianthus Therapeutics

Excellent diversification

The 3 months correlation between Nomura and Dianthus is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings ADR and Dianthus Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dianthus Therapeutics 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 Dianthus Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dianthus Therapeutics has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Dianthus Therapeutics go up and down completely randomly.

Pair Corralation between Nomura Holdings and Dianthus Therapeutics

Considering the 90-day investment horizon Nomura Holdings is expected to generate 24.51 times less return on investment than Dianthus Therapeutics. But when comparing it to its historical volatility, Nomura Holdings ADR is 24.13 times less risky than Dianthus Therapeutics. It trades about 0.05 of its potential returns per unit of risk. Dianthus Therapeutics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  84.00  in Dianthus Therapeutics on October 1, 2024 and sell it today you would earn a total of  2,190  from holding Dianthus Therapeutics or generate 2607.14% return on investment over 90 days.

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

Nomura Holdings ADR  vs.  Dianthus Therapeutics

Nomura Holdings ADR

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings ADR are ranked lower than 8 (%) 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 January 2025.

Dianthus Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dianthus Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Nomura Holdings and Dianthus Therapeutics

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

The idea behind Nomura Holdings ADR and Dianthus Therapeutics 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.