Correlation Between NISSAN CHEMICAL and AMBRA SA

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

By analyzing existing cross correlation between NISSAN CHEMICAL IND and AMBRA SA A, you can compare the effects of market volatilities on NISSAN CHEMICAL and AMBRA SA 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 NISSAN CHEMICAL with a short position of AMBRA SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of NISSAN CHEMICAL and AMBRA SA.

Diversification Opportunities for NISSAN CHEMICAL and AMBRA SA

0.05

Correlation Coefficient

NISSAN CHEMICAL  AMBRA SA

Significant diversification

The 3 months correlation between NISSAN and AMBRA is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding NISSAN CHEMICAL IND and AMBRA SA A in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AMBRA SA A and NISSAN CHEMICAL 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 NISSAN CHEMICAL IND are associated (or correlated) with AMBRA SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AMBRA SA A has no effect on the direction of NISSAN CHEMICAL i.e., NISSAN CHEMICAL and AMBRA SA go up and down completely randomly.

Pair Corralation between NISSAN CHEMICAL and AMBRA SA

Assuming the 90 days trading horizon NISSAN CHEMICAL IND is expected to under-perform the AMBRA SA. But the stock apears to be less risky and, when comparing its historical volatility, NISSAN CHEMICAL IND is 1.98 times less risky than AMBRA SA. The stock trades about -0.03 of its potential returns per unit of risk. The AMBRA SA A is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  274.00  in AMBRA SA A on October 5, 2024 and sell it today you would earn a total of  208.00  from holding AMBRA SA A or generate 75.91% return on investment over 90 days.

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

NISSAN CHEMICAL IND  vs.  AMBRA SA A

NISSAN CHEMICAL IND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NISSAN CHEMICAL IND has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, NISSAN CHEMICAL is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

AMBRA SA A

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with NISSAN CHEMICAL and AMBRA SA

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

The idea behind NISSAN CHEMICAL IND and AMBRA SA A 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.