Correlation Between Nippon Steel and Corning Incorporated

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

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

Diversification Opportunities for Nippon Steel and Corning Incorporated

0.13

Correlation Coefficient

Nippon Steel  Corning Incorporated

Average diversification

The 3 months correlation between Nippon and Corning is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Nippon Steel Corp and Corning Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corning Incorporated 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 Corp are associated (or correlated) with Corning Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corning Incorporated has no effect on the direction of Nippon Steel i.e., Nippon Steel and Corning Incorporated go up and down completely randomly.

Pair Corralation between Nippon Steel and Corning Incorporated

Assuming the 90 days horizon Nippon Steel Corp is expected to under-perform the Corning Incorporated. In addition to that, Nippon Steel is 1.4 times more volatile than Corning Incorporated. It trades about 0.0 of its total potential returns per unit of risk. Corning Incorporated is currently generating about 0.08 per unit of volatility. If you would invest  4,703  in Corning Incorporated on October 22, 2024 and sell it today you would earn a total of  281.00  from holding Corning Incorporated or generate 5.97% return on investment over 90 days.

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

Nippon Steel Corp  vs.  Corning Incorporated

Nippon Steel Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nippon Steel Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong fundamental indicators, Nippon Steel is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Corning Incorporated

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Corning Incorporated are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain essential indicators, Corning Incorporated may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Nippon Steel and Corning Incorporated

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

The idea behind Nippon Steel Corp and Corning Incorporated 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.