Correlation Between Nippon Steel and SCANDION ONC

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

By analyzing existing cross correlation between Nippon Steel and SCANDION ONC DK 0735, you can compare the effects of market volatilities on Nippon Steel and SCANDION ONC 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 SCANDION ONC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nippon Steel and SCANDION ONC.

Diversification Opportunities for Nippon Steel and SCANDION ONC

0.29

Correlation Coefficient

Nippon Steel  SCANDION ONC

Modest diversification

The 3 months correlation between Nippon and SCANDION is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Steel and SCANDION ONC DK 0735 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCANDION ONC DK 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 SCANDION ONC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCANDION ONC DK has no effect on the direction of Nippon Steel i.e., Nippon Steel and SCANDION ONC go up and down completely randomly.

Pair Corralation between Nippon Steel and SCANDION ONC

Assuming the 90 days trading horizon Nippon Steel is expected to generate 0.32 times more return on investment than SCANDION ONC. However, Nippon Steel is 3.08 times less risky than SCANDION ONC. It trades about 0.03 of its potential returns per unit of risk. SCANDION ONC DK 0735 is currently generating about -0.16 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  38.00  from holding Nippon Steel or generate 2.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Nippon Steel  vs.  SCANDION ONC DK 0735

Nippon Steel

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nippon Steel are ranked lower than 2 (%) 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.

SCANDION ONC DK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SCANDION ONC DK 0735 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Nippon Steel and SCANDION ONC

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

The idea behind Nippon Steel and SCANDION ONC DK 0735 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.