Correlation Between Nomura Holdings and Refinaria

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

By analyzing existing cross correlation between Nomura Holdings and Refinaria de Petrleos, you can compare the effects of market volatilities on Nomura Holdings and Refinaria 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 Refinaria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Holdings and Refinaria.

Diversification Opportunities for Nomura Holdings and Refinaria

-0.85

Correlation Coefficient

Nomura Holdings  Refinaria

Pay attention - limited upside

The 3 months correlation between Nomura and Refinaria is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings and Refinaria de Petrleos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Refinaria de Petrleos 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 are associated (or correlated) with Refinaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Refinaria de Petrleos has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Refinaria go up and down completely randomly.

Pair Corralation between Nomura Holdings and Refinaria

Assuming the 90 days trading horizon Nomura Holdings is expected to generate 0.83 times more return on investment than Refinaria. However, Nomura Holdings is 1.21 times less risky than Refinaria. It trades about 0.1 of its potential returns per unit of risk. Refinaria de Petrleos is currently generating about -0.06 per unit of risk. If you would invest  3,173  in Nomura Holdings on September 2, 2024 and sell it today you would earn a total of  443.00  from holding Nomura Holdings or generate 13.96% return on investment over 90 days.

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

Nomura Holdings  vs.  Refinaria de Petrleos

Nomura Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nomura Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Refinaria de Petrleos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Refinaria de Petrleos 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.

Pair Trading with Nomura Holdings and Refinaria

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

The idea behind Nomura Holdings and Refinaria de Petrleos 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.