Correlation Between Nishi-Nippon Railroad and International Game

Can any of the company-specific risk be diversified away by investing in both Nishi-Nippon Railroad and International Game 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 Nishi-Nippon Railroad and International Game into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nishi Nippon Railroad Co and International Game Technology, you can compare the effects of market volatilities on Nishi-Nippon Railroad and International Game 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 Nishi-Nippon Railroad with a short position of International Game. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nishi-Nippon Railroad and International Game.

Diversification Opportunities for Nishi-Nippon Railroad and International Game

-0.15

Correlation Coefficient

Nishi-Nippon Railroad  International Game

Good diversification

The 3 months correlation between Nishi-Nippon and International is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Nishi Nippon Railroad Co and International Game Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Game and Nishi-Nippon Railroad 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 Nishi Nippon Railroad Co are associated (or correlated) with International Game. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Game has no effect on the direction of Nishi-Nippon Railroad i.e., Nishi-Nippon Railroad and International Game go up and down completely randomly.

Pair Corralation between Nishi-Nippon Railroad and International Game

Assuming the 90 days horizon Nishi Nippon Railroad Co is expected to generate 1.12 times more return on investment than International Game. However, Nishi-Nippon Railroad is 1.12 times more volatile than International Game Technology. It trades about 0.03 of its potential returns per unit of risk. International Game Technology is currently generating about -0.01 per unit of risk. If you would invest  1,096  in Nishi Nippon Railroad Co on October 11, 2024 and sell it today you would earn a total of  274.00  from holding Nishi Nippon Railroad Co or generate 25.0% return on investment over 90 days.

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

Nishi Nippon Railroad Co  vs.  International Game Technology

Nishi Nippon Railroad

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nishi Nippon Railroad Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Nishi-Nippon Railroad is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

International Game

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days International Game Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Nishi-Nippon Railroad and International Game

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

The idea behind Nishi Nippon Railroad Co and International Game Technology 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.