Correlation Between Nomura Holdings and Tigo Energy

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

Diversification Opportunities for Nomura Holdings and Tigo Energy

0.25

Correlation Coefficient

Nomura Holdings  Tigo Energy

Modest diversification

The 3 months correlation between Nomura and Tigo is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings ADR and Tigo Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tigo 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 Tigo Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tigo Energy has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Tigo Energy go up and down completely randomly.

Pair Corralation between Nomura Holdings and Tigo Energy

Considering the 90-day investment horizon Nomura Holdings ADR is expected to generate 0.38 times more return on investment than Tigo Energy. However, Nomura Holdings ADR is 2.61 times less risky than Tigo Energy. It trades about 0.11 of its potential returns per unit of risk. Tigo Energy is currently generating about 0.04 per unit of risk. If you would invest  586.00  in Nomura Holdings ADR on December 26, 2024 and sell it today you would earn a total of  70.00  from holding Nomura Holdings ADR or generate 11.95% return on investment over 90 days.

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

Nomura Holdings ADR  vs.  Tigo Energy

Nomura Holdings ADR

Risk-Adjusted Performance

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 reported solid returns over the last few months and may actually be approaching a breakup point.

Tigo Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tigo Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, Tigo Energy may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Nomura Holdings and Tigo Energy

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

The idea behind Nomura Holdings ADR and Tigo 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.

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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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.