Correlation Between Nomura Research and CSP

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

By analyzing existing cross correlation between Nomura Research Institute and CSP Inc, you can compare the effects of market volatilities on Nomura Research and CSP 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 Nomura Research with a short position of CSP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Research and CSP.

Diversification Opportunities for Nomura Research and CSP

-0.46

Correlation Coefficient

Nomura Research  CSP

Very good diversification

The 3 months correlation between Nomura and CSP is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Research Institute and CSP Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSP Inc and Nomura Research 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 Nomura Research Institute are associated (or correlated) with CSP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSP Inc has no effect on the direction of Nomura Research i.e., Nomura Research and CSP go up and down completely randomly.

Pair Corralation between Nomura Research and CSP

Assuming the 90 days horizon Nomura Research is expected to generate 9.35 times less return on investment than CSP. But when comparing it to its historical volatility, Nomura Research Institute is 5.02 times less risky than CSP. It trades about 0.11 of its potential returns per unit of risk. CSP Inc is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,274  in CSP Inc on September 17, 2024 and sell it today you would earn a total of  405.00  from holding CSP Inc or generate 31.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Nomura Research Institute  vs.  CSP Inc

Nomura Research Institute

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nomura Research Institute has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

CSP Inc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CSP Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent basic indicators, CSP demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nomura Research and CSP

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

The idea behind Nomura Research Institute and CSP Inc 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.