Correlation Between Nomura Holdings and Talon Energy

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

Diversification Opportunities for Nomura Holdings and Talon Energy

-0.29
  Correlation Coefficient

Very good diversification

The 3 months correlation between Nomura and Talon is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings ADR and Talon Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Talon Energy 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 Talon Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Talon Energy has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Talon Energy go up and down completely randomly.

Pair Corralation between Nomura Holdings and Talon Energy

If you would invest  517.00  in Nomura Holdings ADR on September 27, 2024 and sell it today you would earn a total of  69.00  from holding Nomura Holdings ADR or generate 13.35% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy2.33%
ValuesDaily Returns

Nomura Holdings ADR  vs.  Talon Energy

 Performance 
       Timeline  
Nomura Holdings ADR 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
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 abnormal primary indicators, Nomura Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Talon Energy 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Talon Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Talon Energy is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Nomura Holdings and Talon Energy Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Nomura Holdings and Talon Energy

The main advantage of trading using opposite Nomura Holdings and Talon Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomura Holdings position performs unexpectedly, Talon Energy 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 Talon Energy will offset losses from the drop in Talon Energy's long position.
The idea behind Nomura Holdings ADR and Talon Energy 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.
Check out your portfolio center.
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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