Correlation Between Nippon Steel and TROPHY GAMES

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

By analyzing existing cross correlation between Nippon Steel and TROPHY GAMES DEV, you can compare the effects of market volatilities on Nippon Steel and TROPHY GAMES 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 Nippon Steel with a short position of TROPHY GAMES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Steel and TROPHY GAMES.

Diversification Opportunities for Nippon Steel and TROPHY GAMES

0.2

Correlation Coefficient

Nippon Steel  TROPHY GAMES

Modest diversification

The 3 months correlation between Nippon and TROPHY is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Steel and TROPHY GAMES DEV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TROPHY GAMES DEV and Nippon Steel 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 Nippon Steel are associated (or correlated) with TROPHY GAMES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TROPHY GAMES DEV has no effect on the direction of Nippon Steel i.e., Nippon Steel and TROPHY GAMES go up and down completely randomly.

Pair Corralation between Nippon Steel and TROPHY GAMES

Assuming the 90 days trading horizon Nippon Steel is expected to generate 0.69 times more return on investment than TROPHY GAMES. However, Nippon Steel is 1.45 times less risky than TROPHY GAMES. It trades about 0.02 of its potential returns per unit of risk. TROPHY GAMES DEV is currently generating about -0.08 per unit of risk. If you would invest  1,881  in Nippon Steel on September 12, 2024 and sell it today you would earn a total of  19.00  from holding Nippon Steel or generate 1.01% return on investment over 90 days.

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

Nippon Steel  vs.  TROPHY GAMES DEV

Nippon Steel

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Steel are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Nippon Steel is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

TROPHY GAMES DEV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TROPHY GAMES DEV has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain 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 Nippon Steel and TROPHY GAMES

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

The idea behind Nippon Steel and TROPHY GAMES DEV 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.