Correlation Between NIPPON STEEL and SAXLUND GROUP

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

By analyzing existing cross correlation between NIPPON STEEL SPADR and SAXLUND GROUP AB, you can compare the effects of market volatilities on NIPPON STEEL and SAXLUND GROUP 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 SAXLUND GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of NIPPON STEEL and SAXLUND GROUP.

Diversification Opportunities for NIPPON STEEL and SAXLUND GROUP

0.23

Correlation Coefficient

NIPPON STEEL  SAXLUND GROUP

Modest diversification

The 3 months correlation between NIPPON and SAXLUND is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding NIPPON STEEL SPADR and SAXLUND GROUP AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SAXLUND GROUP AB 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 SPADR are associated (or correlated) with SAXLUND GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SAXLUND GROUP AB has no effect on the direction of NIPPON STEEL i.e., NIPPON STEEL and SAXLUND GROUP go up and down completely randomly.

Pair Corralation between NIPPON STEEL and SAXLUND GROUP

If you would invest  20.00  in SAXLUND GROUP AB on September 22, 2024 and sell it today you would earn a total of  0.00  from holding SAXLUND GROUP AB or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

NIPPON STEEL SPADR  vs.  SAXLUND GROUP AB

NIPPON STEEL SPADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

SAXLUND GROUP AB

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SAXLUND GROUP AB are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, SAXLUND GROUP reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with NIPPON STEEL and SAXLUND GROUP

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

The idea behind NIPPON STEEL SPADR and SAXLUND GROUP AB 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.